Exhibit 99.1
Contact:
Gerry Chaney, Chief Financial Officer
(714) 414-4000
FOR IMMEDIATE RELEASE
PACIFIC SUNWEAR ANNOUNCES FOURTH QUARTER
EARNINGS INCREASE 19% TO $40.9 MILLION
FISCAL 2004 EARNINGS INCREASE 33% TO $105.9 MILLION
ANAHEIM, CA/March 1, 2005— Pacific Sunwear of California, Inc. (NASDAQ:PSUN) (the “Company”) today reported results for the fourth quarter and year ended January 29, 2005.
Net income for the fourth quarter increased 19% to $40.9 million compared to $34.5 million for the fourth quarter of fiscal 2003. Net income per share increased 26% to $.54 per diluted share compared to $.43 per diluted share for the fourth quarter of fiscal 2003. Total sales for the fourth quarter of fiscal 2004 (thirteen weeks) were $379.7 million, an increase of 16.2% over total sales of $326.8 million for the fourth quarter of fiscal 2003. Company same store sales increased 5.1% for the fourth quarter of fiscal 2004 with PacSun same store sales up 4.8% and d.e.m.o. same store sales up 7.5%.
Net income for fiscal 2004 increased 33% to $105.9 million, or $1.37 per diluted share, compared to $79.9 million, or $1.01 per diluted share for fiscal 2003. Total sales for fiscal 2004 (fifty-two weeks) were $1,229.8 million, an increase of 18.1% over total sales of $1,041.5 million for fiscal 2003 (fifty-two weeks). Company same store sales increased 7.3% for fiscal 2004 with PacSun same store sales up 7.5% and d.e.m.o. same store sales up 5.7%.
As previously announced in the Company’s Current Report on Form 8-K issued February 25, 2005, the Company has corrected its accounting for certain lease matters. The net income and earnings per share amounts noted above for the fourth quarters and fiscal years ended January 29, 2005 and January 31, 2004, respectively, have been restated to reflect the impact of those corrections.
“I am pleased to report record earnings for PacSun for the fourth quarter and full year,” stated Greg Weaver, Chairman and CEO. “In addition, the Company achieved record operating income levels of 17.1% and 13.7% for the fourth quarter and full year, respectively. Sales per square foot improved to $374 from $363 for the prior year. For fiscal 2005, we plan to open 120 net new stores and expand or relocate approximately 35 stores with square footage growing approximately 15%. The 120 net new stores include 70 PacSun stores, 10 PacSun Outlet stores, and 40 d.e.m.o. stores. This will take the year-end 2005 store count to 1,100,” concluded Mr. Weaver.
Pacific Sunwear is a leading specialty retailer of everyday casual apparel, accessories and footwear designed to meet the needs of active teens and young adults. At January 29, 2005, the Company operated 744 PacSun stores, 84 PacSun outlet stores and 162 d.e.m.o.
3450 East Miraloma Avenue · Anaheim, CA 92806 · (714) 414-4000
stores for a total of 990 stores in 50 states and Puerto Rico. PacSun’s website address iswww.pacsun.com.
The matters discussed in this news release with respect to number of new stores, and square footage growth of 15%, respectively, are forward looking statements that involve risks and uncertainties, including changes in consumer demands and preferences, higher than estimated costs of goods sold or selling, general and administrative costs, competition from other retailers and uncertainties generally associated with apparel retailing. The historical results achieved are not necessarily indicative of future prospects of the Company.
More information on factors that could affect forward looking statements and the Company’s financial results is included in the Company’s Annual Report on Form 10-K for the year ended January 31, 2004 and subsequent periodic reports filed with the Securities and Exchange Commission.
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3450 East Miraloma Avenue · Anaheim, CA 92806 · (714) 414-4000
PACIFIC SUNWEAR OF CALIFORNIA, INC.
SUMMARY STATEMENTS OF INCOME
(unaudited)
(in $ thousands, except share and per share data)
| | | | | | | | | | | | | | | | | |
| | | Fourth Quarter Ended | | | Fiscal Year Ended | |
| | | JAN. 29, | | | JAN. 31, | | | JAN. 29, | | | JAN. 31, | |
| | | 2005 | | | 2004 | | | 2005 | | | 2004 | |
| Net sales | | $ | 379,674 | | | $ | 326,784 | | | $ | 1,229,762 | | | $ | 1,041,456 | |
| Gross margin | | | 142,293 | | | | 121,112 | | | | 444,422 | | | | 370,523 | |
| Selling, G&A expenses | | | 77,259 | | | | 66,497 | | | | 276,036 | | | | 242,837 | |
| | | | | | | | | | | | | |
| Operating income | | | 65,034 | | | | 54,615 | | | | 168,386 | | | | 127,686 | |
| Interest income, net | | | 714 | | | | 391 | | | | 1,889 | | | | 732 | |
| | | | | | | | | | | | | |
| Income before taxes | | | 65,748 | | | | 55,006 | | | | 170,275 | | | | 128,418 | |
| Income tax expense | | | 24,859 | | | | 20,552 | | | | 64,383 | | | | 48,555 | |
| | | | | | | | | | | | | |
| Net income | | $ | 40,889 | | | $ | 34,454 | | | $ | 105,892 | | | $ | 79,863 | |
| | | | | | | | | | | | | |
| Net income per share, basic | | $ | 0.55 | | | $ | 0.44 | | | $ | 1.40 | | | $ | 1.04 | |
| | | | | | | | | | | | | |
| Net income per share, diluted | | $ | 0.54 | | | $ | 0.43 | | | $ | 1.37 | | | $ | 1.01 | |
| | | | | | | | | | | | | |
| Weighted avg. shares outstanding, basic | | | 74,408,255 | | | | 78,287,219 | | | | 75,825,897 | | | | 76,595,758 | |
| | | | | | | | | | | | | |
| Weighted avg. shares outstanding, diluted | | | 75,856,319 | | | | 80,226,072 | | | | 77,464,115 | | | | 78,849,651 | |
| | | | | | | | | | | | | |
Note: All periods presented reflect the impact of the lease accounting corrections announced in the Company’s Current Report on Form 8-K issued February 25, 2005. All periods presented also reflect a reclassification of e-commerce shipping revenues and expenses from selling, general and administrative expenses into net sales (for e-commerce shipping revenues) and cost of sales (for e-commerce shipping expenses).
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3450 East Miraloma Avenue · Anaheim, CA 92806 · (714) 414-4000
PACIFIC SUNWEAR OF CALIFORNIA, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(in $ thousands)
| | | | | | | | | |
| | | JAN. 29, 2005 | | | JAN. 31, 2004 | |
ASSETS | | | | | | | | |
| Current assets: | | | | | | | | |
| Cash & cash equivalents | | $ | 106,758 | | | $ | 142,840 | |
| Short-term investments | | | 36,773 | | | | 33,035 | |
| Inventories | | | 175,081 | | | | 147,751 | |
| Other current assets | | | 34,206 | | | | 29,910 | |
| | | | | | | |
| Total current assets | | | 352,818 | | | | 353,536 | |
| Property and equipment, net | | | 290,128 | | | | 260,590 | |
| Other long-term assets | | | 20,738 | | | | 18,081 | |
| | | | | | | |
Total assets | | $ | 663,684 | | | $ | 632,207 | |
| | | | | | | |
| | | | | | | | | |
| LIABILITIES AND SHAREHOLDERS’ EQUITY |
| Current liabilities: | | | | | | | | |
| Accounts payable and accrued expenses | | $ | 87,781 | | | $ | 93,634 | |
| Income taxes payable | | | 5,885 | | | | 14,899 | |
| Current portion of long-term debt and capital leases | | | 1,536 | | | | 1,886 | |
| | | | | | | |
| Total current liabilities | | | 95,202 | | | | 110,419 | |
| Long-term portion of debt and capital leases | | | 403 | | | | 1,455 | |
| Deferred lease incentives | | | 67,683 | | | | 56,996 | |
| Deferred rent | | | 27,094 | | | | 24,781 | |
| Other long-term liabilities | | | 24,094 | | | | 17,638 | |
| | | | | | | |
| Total liabilities | | | 214,476 | | | | 211,289 | |
| Total shareholder’s equity | | | 449,208 | | | | 420,918 | |
| | | | | | | |
Total liabilities and shareholders’ equity | | $ | 663,684 | | | $ | 632,207 | |
| | | | | | | |
Note: All periods presented reflect the impact of the lease accounting corrections announced in the Company’s Current Report on Form 8-K issued February 25, 2005.
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3450 East Miraloma Avenue · Anaheim, CA 92806 · (714) 414-4000
PACIFIC SUNWEAR OF CALIFORNIA, INC.
CONDENSED CONSOLIDATED CASH FLOWS
(unaudited)
(in $ thousands)
| | | | | | | | | |
| | | FOR THE YEAR ENDED | |
| | | JAN. 29, 2005 | | | JAN. 31, 2004 | |
| Cash flows from operating activities: | | | | | | | | |
| Net income | | $ | 105,892 | | | $ | 79,863 | |
| Depreciation & amortization | | | 49,800 | | | | 43,564 | |
| Loss on disposal of property and equipment | | | 3,692 | | | | 2,753 | |
| Tax benefits related to exercise of stock options | | | 8,235 | | | | 15,810 | |
| Changes in operating assets and liabilities: | | | | | | | | |
| Inventories | | | (27,330 | ) | | | (24,318 | ) |
| Accounts payable and accrued expenses | | | (766 | ) | | | 27,525 | |
| Income taxes and deferred income taxes | | | (2,933 | ) | | | 12,076 | |
| Deferred lease incentives | | | 10,687 | | | | 4,273 | |
| Deferred rent | | | 2,313 | | | | 2,013 | |
| Other assets and liabilities | | | (6,578 | ) | | | (2,555 | ) |
| | | | | | | |
| Net cash provided by operating activities | | | 143,012 | | | | 161,004 | |
| Cash flows from investing activities: | | | | | | | | |
| Purchases of property and equipment | | | (81,992 | ) | | | (49,568 | ) |
| Purchases of short-term investments | | | (40,695 | ) | | | (33,035 | ) |
| Maturities of short-term investments | | | 36,957 | | | | — | |
| | | | | | | |
| Net cash used in investing activities | | | (85,730 | ) | | | (82,603 | ) |
| Cash flows from financing activities: | | | | | | | | |
| Repurchases of common stock | | | (109,502 | ) | | | — | |
| Proceeds from exercise of stock options | | | 18,194 | | | | 30,381 | |
| Repayments under long-term debt and capital leases | | | (2,056 | ) | | | (2,347 | ) |
| Cash paid in-lieu of fractional shares | | | — | | | | (33 | ) |
| | | | | | | |
| Net cash (used in)/provided by financing activities | | | (93,364 | ) | | | 28,001 | |
| | | | | | | |
| Net (decrease)/increase in cash and cash equivalents | | | (36,082 | ) | | | 106,402 | |
| Cash and cash equivalents, beginning of period | | | 142,840 | | | | 36,438 | |
| | | | | | | |
| Cash and cash equivalents, end of period | | $ | 106,758 | | | $ | 142,840 | |
| | | | | | | |
Note: All periods presented reflect the impact of the lease accounting corrections announced in the Company’s Current Report on Form 8-K issued February 25, 2005.
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3450 East Miraloma Avenue · Anaheim, CA 92806 · (714) 414-4000
PACIFIC SUNWEAR OF CALIFORNIA, INC.
SELECTED STORE OPERATING DATA
| | | | | | | | | |
| Total stores for fiscal year ended: | | JAN. 29, 2005 | | | JAN. 31, 2004 | |
| Beginning | | | 877 | | | | 791 | |
| New openings | | | 118 | | | | 90 | |
| Closures | | | (5 | ) | | | (4 | ) |
| | | | | | | |
| Ending | | | 990 | | | | 877 | |
| | | | | | | | | |
Total stores by concept: | | | | | | | | |
| PacSun stores | | | 744 | | | | 677 | |
| Outlet stores | | | 84 | | | | 79 | |
| d.e.m.o. stores | | | 162 | | | | 121 | |
| | | | | | | |
| Total | | | 990 | | | | 877 | |
| | | | | | | | | |
Total square footage (in 000’s) | | | 3,448 | | | | 2,997 | |
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3450 East Miraloma Avenue · Anaheim, CA 92806 · (714) 414-4000
