Anaheim, CA-based specialty retailer Pacific Sunwear of California Inc. (PSUN) reported its third-quarter fiscal 2013 results wherein it incurred a loss of 5 cents a share, wider than a loss of 2 cents in the comparable prior-year period, on an adjusted basis. The quarterly loss came in line with the Zacks Consensus Estimate.
Earnings were majorly impacted by the 53rd week calendar shift, in the absence of which the company would have reported break-even results compared to last year.
On a reported basis, the company posted earnings of 23 cents a share from continuing operations, significantly up from 5 cents delivered in the year-ago quarter.
Exploring Further
Net sales dropped 4.1% to $206.6 million, almost in line with the Zacks Consensus Estimate of $206 million. Sales were also primarily impacted by the calendar shift.
However, same-store sales for the quarter inched up 1%, representing the 7th consecutive quarter of positive same store sales. For November, it rose 6% on the back of robust Black Friday sales, strong emerging brands and an exclusive range of products.
Adjusted gross profit slipped 14.2% to $51.9 million with the gross margin contracting 300 basis points to 25.1%.
Operating loss was $2.2 million compared to an operating profit of $1.1 million in the prior-year quarter.
Adjusted selling, general and administrative (SG&A) expenses in the reported quarter were approximately $53.9 million, down 9.1%, year on year.
Financial Update
Pacific Sunwear ended the quarter with cash and cash equivalents of $19.9 million, long-term debt of $80.7 million, and shareholders’ equity of $40.3 million.
Store Update
During the third quarter, this sports and fashion retailer opened 4 new stores and closed 13, taking the total store count to 635 (comprising 517 PacSun Core stores and 118 PacSun Outlet stores) , spanning about 2.5 million square foot.
Going Forward
In the fourth quarter of fiscal 2013, the company expects loss between 12–17 cents, taking into account the effects of calendar shift. Management projects revenue between $216 million and $225 million.
Moreover, management forecasts same-store sales to range between 1–5%, gross margin to contract further and lie somewhere between 21–24% and SG&A to come in the range of $61–63 million, in the coming quarter.
Other Stocks to Consider
Pacific Sunwear, one of the leading seller of clothing, footwear and accessories, currently holds a Zacks Rank #4 (Sell). Other better-ranked stocks in the related industry include Fossil Group, Inc. (FOSL), Deckers Outdoor Corp. (DECK) and ANTA Sports Products Ltd (ANPDF), all carrying a Zacks Rank #2 (Buy).
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