Home / Knowledge / News / Apparel/Garments / PacSun posts Q3 results; will shut 175-200 stores
PacSun posts Q3 results; will shut 175-200 stores
08
Dec '11
Pacific Sunwear of California, Inc. announced the completion of extensive negotiations with landlords that will result in the closure of approximately 175-200 underperforming stores within the next 14 months.

The Company also announced the completion of a five-year, $100 million revolving credit facility with Wells Fargo Capital Finance and a five-year, $60 million senior secured term loan funded by Golden Gate Capital, a leading private equity firm with extensive experience in the retail sector.

"The combination of these transactions greatly enhances our financial and operating position, and is another critical step forward as we work to re-establish PacSun as a leading specialty retailer across the U.S.," said Gary H. Schoenfeld, President and Chief Executive Officer.

"With the support from all of our major landlords, we can now focus on our targeted base of 550-600 better performing stores and our enhanced merchandising and marketing strategies for becoming the preferred destination among teens and young adults for great style and great brands."

Real Estate Restructuring
The agreements reached with the Company's landlords include the buyout of approximately 75 leases at a cost of approximately $13 million, short-term extensions for approximately 50 better performing stores, and termination upon lease expiration of approximately 115 stores by the end of fiscal 2012. A portion of the proceeds from the Golden Gate Capital senior secured term loan will be utilized to fund the lease buyout payments.

"For the prior twelve months through the end of the third quarter, the stores that we will be closing had average sales of $0.6 million and a same-store sales rate of -9%. Conversely, average sales for the remainder of our stores were approximately $1.1 million with a same-store sales rate of -1% which represents a much healthier base to move forward with," Mr. Schoenfeld said.

New Financings
The Company entered into a new five year $100 million revolving credit facility with Wells Fargo Capital Finance, replacing the previous revolving credit facility which would have expired in April, 2013. The Wells Fargo credit facility is secured primarily by a first priority interest in inventory and other excess working capital, and bears interest at the rate of 150-200 basis points over LIBOR.

Golden Gate's senior secured term loan is secured by a second lien on the Company's inventory and receivables, and a first lien in the Company's remaining assets.

In addition to interest and fees payable on the loan, the Company issued convertible preferred stock to an affiliate of Golden Gate which gives it the right to purchase up to 19.9% of the Company's common stock (16.7% on a fully-diluted basis) at an exercise price of $1.75, a 33% premium over the closing price of the Company's common stock on December 6, 2011.

Golden Gate also received the right to appoint two members to PacSun's Board of Directors. Joshua Olshansky, a Managing Director and head of Golden Gate's retail group, and Neale Attenborough, Golden Gate's retail group Operating Partner, were appointed to fill the two current vacancies on PacSun's Board.


Must ReadView All

Indian govt approves special package for leather, footwear

Textiles | On 16th Dec 2017

Indian govt approves special package for leather, footwear

The Union Cabinet chaired by PM Narendra Modi has approved a special...

EU parliament resolution calls for Cambodia sanctions

Apparel/Garments | On 16th Dec 2017

EU parliament resolution calls for Cambodia sanctions

Following the ongoing crackdown in Cambodia on the opposition and...

Affordable prices to be hit if US pulls out of NAFTA: NRF

Apparel/Garments | On 16th Dec 2017

Affordable prices to be hit if US pulls out of NAFTA: NRF

US retailers’ ability to offer consumers quality products at...

Interviews View All

Nuno Venda
ROQ

‘There has been an increase in demand for water based inks, rather than...

Amardeep Singh
Orient Craft

'In export markets, the trend in terms of embroidery, is towards matte...

Dharmendra Shah
Ozone PB Spintex Limited

‘We have made huge investments to ensure quality yarn production.’

Harsh Shah

Established in 1956 with a small beginning, Embee today manufactures a...

Vikas Banduke

Softech Controls Private Limited (SCPL) is a part of the Cotmac Group, an...

Urmil Arya

Sushila International, a well established textile organisation established ...

Marten Alkhagen
Swerea IVF AB

Marten Alkhagen, Senior Scientist - Nonwoven and Technical Textiles of...

Eric Scholler
Groz-Beckert

The Indian market has huge potential in technical textiles, and by far,...

Paolo Ocleppo
Sandvik Hyperion

Paolo Ocleppo, Rotary Cutting Segment manager, Sandvik Hyperion discusses...

Vaanee Bhatia
Gritstones Clothing

<div>Delhi-based Gritstones Clothing offers quality and exemplary style...

Silvia Venturini Fendi
Fendi s.r.l

"Yes, my confidence and positive attitude are my strengths and should be...

Ritu Kumar
Label Ritu Kumar

‘Classics will return’ "There are a lot of people wearing western clothes ...

Press Release

Press Release

Letter to Editor

Letter to Editor

RSS Feed

RSS Feed

Submit your press release on


editorial@fibre2fashion.com

Letter To Editor






(Max. 8000 char.)

Search Companies





SEARCH

December 2017

Subscribe today and get the latest update on Textiles, Fashion, Apparel and so on.

news category


Related Categories:

Planning to Take the Leap towards
Sustainability?

Do you see sustainability as a route to business growth?

Yes No

Do you think the sustainability space has the needed tools and resources available for a business to lead change?

Yes No

Active Poll

Do you see sustainability as a route to business growth?

Yes
68.1%
No
13.8%
Skip
18.1%

Total Votes: 94

Do you think adopting a sustainable approach will be a profitable move for your business?

Yes No

Active Poll

Do you think the sustainability space has the needed tools and resources available for a business to lead change?

Yes
62.8%
No
29.8%
Skip
7.4%

Total Votes: 94

Do you want the world to know about your sustainability journey and your business’ environmental footprint?

Yes No

Active Poll

Do you think adopting a sustainable approach will be a profitable move for your business?

Yes
87.2%
No
9.6%
Skip
3.2%

Total Votes: 94

Thanks for your valuable feedback. Claim your free latest sustainability e-book.

Active Poll

Do you want the world to know about your sustainability journey and your business’ environmental footprint?

Yes
81.9%
No
8.5%
Skip
9.6%

Total Votes: 94


E-News Insight
Subscribe Today and Get the
Latest News Update in Your Mail Box.
Advanced Search