Pacific Sunwear reports marginal rise in Q2 net sales

REPORT_ Net sales of Pacific Sunwear of California from continuing operations

for the second quarter of fiscal 2014 ended August 2, 2014, were 211.7 million dollars versus net sales from continuing operations of 210.1 million dollars for the second quarter of fiscal 2013 ended August 3, 2013. Comparable store sales for the second quarter of fiscal 2014 were 0.3 percent. The Company ended the second quarter of fiscal 2014 with 618 stores versus 637 stores a year ago.

On a GAAP basis, the Company reported income from continuing operations of 7.5 million dollars, or 0.10 dollars per diluted share for the second quarter of fiscal 2014, compared to a loss from continuing operations of 18.6 million dollars, or 0.27 dollars per diluted share for the second quarter of fiscal 2013. Income from continuing operations for the Company's second quarter of fiscal 2014 included a non-cash gain of 10.4 million dollars, or 0.14 dollars per diluted share.

On a non-GAAP basis, excluding the non-cash gain on the derivative liability, and assuming a tax benefit of approximately 1.3 million dollars, the Company would have incurred a loss from continuing operations for the second quarter of fiscal 2014 of 1.8 million dollars, or 0.03 dollars per diluted share, as compared to income from continuing operations of 1.6 million dollars, or 0.02 dollars per diluted share, for the same period a year ago.

“As previously indicated, sales trends improved as the quarter progressed led by continued growth in our Men's business resulting in non-GAAP EPS at the higher end of our guidance,” said Gary H. Schoenfeld, President and Chief Executive Officer, adding, “For Q3, even in the face of a down-trending denim cycle we are encouraged by the positive response to the balance of our initial fall assortments. We continue to believe that our core strategies are attracting new customers and differentiating PacSun in this very competitive market.”

The Company's guidance range for the third quarter of fiscal 2014 contemplates a non-GAAP loss per diluted share from continuing operations of between 0.09 dollars and 0.04 dollars, compared to 0.05 dollars in the third quarter of fiscal 2013. The forecasted third quarter non-GAAP loss from continuing operations per diluted share guidance range is based on the assumptions that comparable store sales may remain flat to increase over 3 percent; revenue from 203 million dollars to 208 million dollars; gross margin rate, including buying, distribution and occupancy, of 25 percent to 27 percent.