PacSun Rises in West: $1 Billion in Sales, 1,100 Units on Horizon

Pacific Sunwear is riding high in the surf these days, with major plans to expand its chains and continue its solid growth.

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Greg Weaver and Tim Harmon

Photo By WWD Staff

ANAHEIM, Calif. — Girls really do rule.

At least at Pacific Sunwear of California Inc., where growth is skyrocketing at a time when other retailers are grappling with a tough economy, merchandise missteps, the consumer blahs and a retail environment that has been universally labeled one of the worst in recent memory. It’s even outpacing competitors in the junior category like Abercrombie & Fitch and Hot Topic thanks to its focus on teen girls and the hot surf, skate and urban categories.

And the company, which operates the PacSun and Demo chains, wants to ride the wave as far as it can. As recently as 1995, the 22-year-old PacSun was a men’s chain with 150 stores. Now, the corporation’s 819 stores nationwide are approaching the $1 billion mark in annual sales.

More than 300 stores are in the planning stages through 2005, which will be a 39 percent increase in doors. PacSun, currently at 635 units, is expected to grow to 825; PacSun Outlet, at 75 units, will add another 10 to 15, and Demo’s 109 could more than double.

Around 83 stores are expected to bow this year alone, and the company expects to expand 30 of its “highly productive” PacSun stores, increasing the average store size to 3,700 square feet.

Within two years, the group expects to have 1,110 stores — not far from Gap brand’s 1,446 units.

“We’re at a critical-mass stage right now,” said chairman and chief executive officer Greg Weaver in an exclusive interview, noting Business Week, Forbes and Fortune have recognized the chain as a hot-growth enterprise. “We’re not a little company doing well. We’re a big company doing well.”

The retailer last month scored a staggering 142 percent jump in first-quarter net income, to $8 million in the first quarter ended May 3 from $3.3 million in the year-ago period — at a time when many other juniors specialty stores posted significant profit drops. Sales for the same quarter increased to $198.3 million from $161.7 million while comparable-store sales increased 13.2 percent. Teen girls’ comps for both PacSun and Demo have been in the double-digit range for the last six quarters.
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