Pacific Sunwear Of California (PSUNQ) 8-K Current report

EXHIBIT 99.1

CONTACT:
Greg Weaver, Chairman, CEO (714) 414-4000
Carl Womack, Chief Financial Officer (714) 414-4003

FOR IMMEDIATE RELEASE

PACSUN ANNOUNCES FOURTH QUARTER
EARNINGS INCREASE 48% TO $34.3 MILLION
FISCAL 2003 EARNINGS INCREASE 61% TO $80.2 MILLION

     ANAHEIM, CA/March 2, 2004-— Pacific Sunwear of California, Inc. (NASDAQ:PSUN) today reported results for the fourth quarter and year ended January 31, 2004.

     Net income for the fourth quarter increased 48% to $34.3 million, or $.44 per share, basic, and $.43 per share, diluted, compared to $23.2 million, or $.31 per share, basic and diluted, for the fourth quarter of fiscal 2002. Total sales for the fourth quarter (13 weeks) ended January 31, 2004 were $326.3 million, an increase of 22.9% over total sales of $265.6 million for the fourth quarter (13 weeks) ended February 1, 2003. Same-store sales increased 12.0% for the comparable thirteen-week period ended January 31, 2004.

     “I am pleased to report record quarterly earnings for PacSun of $34.3 million which was a 48% increase over fourth quarter last year,” stated Greg Weaver, Chairman and CEO. “For fiscal 2003, we achieved a 61% increase in net earnings with operating income of $128.2 million, or 12.3% of sales. At PacSun, we are improving market share with the help of multiple brands and the strength of our footwear and accessory businesses. At d.e.m.o., we substantially improved our overall merchandising in 2003, particularly in our girls and accessory businesses. d.e.m.o. same store sales grew 21% in 2003 on top of a 12.4% same store sales increase in 2002. For 2003, average new d.e.m.o. store sales are trending at nearly $1.1 million. Sales per square foot for the d.e.m.o. chain were $405 per foot for the year. For fiscal 2004, we plan to open 110 net new stores and expand or relocate approximately 35 stores with square footage growing approximately 15%. The 110 net new stores include 65 PacSun stores, 5 PacSun Outlet stores, and 40 d.e.m.o. stores. This will take the year-end 2004 store count to 987. Our financial guidance for fiscal 2004 is for earnings per share growth of 20% or better compared to 2003. Earnings growth of 20% equates to $1.22 and assumes same store sales growth of approximately 5%. The $1.22 equates to a pre-tax margin of approximately 13%,” concluded Mr. Weaver.

     Total sales for fiscal 2003 (52 weeks) were $1.04 billion, an increase of 22.9% over sales of $846.4 million for fiscal 2002 (52 weeks). Same-store sales increased 13.1% for the comparable fifty-two week period ended January 31, 2004. Net income for fiscal 2003 increased 61% to $80.2 million, or $1.05 per share, basic, and $1.02 per share, diluted, compared to $49.7 million, or $0.67 per share, basic, and $0.66 per share, diluted, for fiscal 2002.

     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. The Company ended fiscal 2003 operating 677 PacSun stores, 79 PacSun outlet stores and 121 d.e.m.o. stores, for a total of 877 stores in 50 states and Puerto Rico. As of March 2, 2004, the Company operated 680 PacSun stores, 79 PacSun outlet stores and 123 d.e.m.o. stores for a total of 882 stores in 50 states and Puerto Rico. PacSun’s website address is www.PacSun.com.

- MORE -

3450 East Miraloma Avenue, Anaheim, CA 92806 (714) 414-4000

     The matters discussed in this news release with respect to number of new stores, square footage growth of 15%, estimated 2004 earnings per share growth of 20%, estimated 2004 same store sales growth of 5%, and estimated 2004 pre-tax margin of 13%, 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 Report on Form 10-K for the year ended February 1, 2003 and subsequent periodic reports filed with the Securities and Exchange Commission.

PACIFIC SUNWEAR OF CALIFORNIA, INC.
SUMMARY STATEMENT OF INCOME
(unaudited)
(in $000’s, except share and per share data)

	FOURTH QUARTER ENDED					TWELVE MONTHS ENDED
	01/31/04		02/01/03			01/31/04		02/01/03
Net sales		326,318		265,590			1,040,294		846,393
Gross margin		119,011		94,997			363,317		283,683
Selling, G&A expense		64,569		57,320			235,068		202,445
Operating income		54,442		37,677			128,249		81,238
Interest income/(expense)		391		(1	)		732		(594	)
Income before taxes		54,833		37,676			128,981		80,644
Income tax expense		20,487		14,467			48,768		30,967
Net income		34,346		23,209			80,213		49,677
Net income per share, basic *		0.44		0.31			1.05		0.67
Net income per share, diluted *		0.43		0.31			1.02		0.66
Weighted average shares outstanding, basic *		78,287,219		74,088,657			76,595,758		73,931,520
Weighted average shares outstanding, diluted *		80,226,072		75,765,821			78,849,651		75,146,991

* Prior year share and per share amounts have been adjusted for the three-for-two stock split effected August 25, 2003.

3450 East Miraloma Avenue, Anaheim, CA 92806 (714) 414-4000

PACIFIC SUNWEAR OF CALIFORNIA, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(in $000’s)

	01/31/04		02/01/03
ASSETS
Current assets
Cash & cash equivalents		142,840		36,438
Short-term investments		33,035		—
Inventories		147,751		123,433
Other current assets		29,910		22,762
Total current assets		353,536		182,633
Property and equipment, net		203,644		201,513
Other long-term assets		18,081		15,597
Total assets		575,261		399,743
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable		38,668		28,456
Accrued expenses		54,966		34,522
Income taxes payable		15,024		8,000
Current portion of long-term debt and capital leases		1,886		2,350
Total current liabilities		110,544		73,328
Long-term portion of debt and capital leases		1,455		3,338
Other long-term liabilities		34,500		20,686
Total liabilities		146,499		97,352
Total shareholders’ equity		428,762		302,391
Total liabilities and shareholders’ equity		575,261		399,743

3450 East Miraloma Avenue, Anaheim, CA 92806 (714) 414-4000

PACIFIC SUNWEAR OF CALIFORNIA, INC.
CONDENSED CONSOLIDATED CASH FLOWS
(unaudited)
(in $000’s)

	FOR THE FISCAL YEAR ENDED
	01/31/04			02/01/03
Cash flows from operating activities:
Net income		80,213			49,677
Depreciation & amortization		36,246			32,453
Loss on disposal of property and equipment		1,834			4,240
Changes in operating assets and liabilities:
Inventories		(24,318	)		(20,921	)
Accounts payable		10,212			(9,037	)
Accrued expenses		20,444			16,751
Income taxes and deferred income taxes		28,099			3,235
Other assets and liabilities		(1,083	)		225
Net cash provided by operating activities		151,647			76,623
Cash flows from investing activities:
Capital expenditures		(40,211	)		(40,423	)
Purchases of short-term investments		(33,035	)		—
Net cash used in investing activities		(73,246	)		(40,423	)
Cash flows from financing activities:
Proceeds from exercise of stock options		30,381			3,444
Cash paid in lieu of fractional shares in stock split		(33	)		(14	)
Repayments of long-term debt obligations		(825	)		(25,504	)
Principal payments under capital leases		(1,522	)		(824	)
Net cash provided by/(used in) financing activities		28,001			(22,898	)
Net increase in cash and cash equivalents		106,402			13,302
Cash and cash equivalents, beginning of period		36,438			23,136
Cash and cash equivalents, end of period		142,840			36,438

PACIFIC SUNWEAR OF CALIFORNIA, INC.
SELECTED STORE OPERATING DATA

	JAN. 31, 2004			FEB. 1, 2003
Stores open at beginning of year		791			718
Stores opened during year		90			85
Stores closed during year		(4	)		(12	)
Stores open at end of year		877			791
Stores open at beginning of fourth quarter		863			787
Stores opened during fourth quarter		15			7
Stores closed during fourth quarter		(1	)		(3	)
Stores open at end of fourth quarter		877			791
Other operating data:
PacSun stores		677			612
Outlet stores		79			72
d.e.m.o. stores		121			107
Total square footage at end of period (in thousands)		2,997			2,647

3450 East Miraloma Avenue, Anaheim, CA 92806 (714) 414-4000