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Pacific Sunwear issues second quarter guidance
25
May '11
Pacific Sunwear of California Inc, announced that net sales for the first quarter of fiscal 2011 ended April 30, 2011 were $186 million, a decrease of 2% from net sales of $190 million for the first quarter of fiscal 2010 ended May 1, 2010. Total Company same-store sales increased 1% during the first quarter of fiscal 2011.

The Company reported a net loss of $31 million, or $(0.48) per share, for the first quarter of fiscal 2011 compared to a net loss of $31 million, or $(0.47) per share, for the first quarter of fiscal 2010. Results for the first quarter of fiscal 2011 reflect the continuing impact of a valuation allowance against the Company's deferred tax assets. On a comparable non-GAAP basis, using a normalized 36.5% income tax rate, the Company's non-GAAP net loss for the quarter was $20 million, or $(0.30) per share.

"Getting back to a positive comp is certainly an important step in the turnaround of our business," said Gary H. Schoenfeld, President and Chief Executive Officer. "As our new team comes together, we have initiated a number of important changes in merchandising, marketing and in-store experience that customers are beginning to respond to."

Financial Outlook for Second Fiscal Quarter of 2011

The Company's guidance range for the second quarter of fiscal 2011 contemplates a GAAP net loss per share of $(0.36) to $(0.46) which reflects the continuing impact of maintaining a valuation allowance against deferred tax assets and a low effective tax rate. On a non-GAAP basis, using a normalized effective income tax rate of 36% to 37%, the Company's guidance range translates to a net loss of $(0.22) to $(0.29) per share for the second quarter of fiscal 2011.

The forecasted second quarter GAAP guidance range is based on the following major assumptions:

• Same-store sales of -3% to +2%;
• Gross margin rate, including buying, distribution and occupancy, of 19% to 21%;
• SG&A expenses in the range of $67 million to $69 million; and
• Minimal income tax expense as the Company no longer records income tax benefits against its operating losses.

Pacific Sunwear of California Inc and its subsidiaries is a leading specialty retailer rooted in the action sports, fashion and music influences of the California lifestyle. The Company sells a combination of branded and proprietary casual apparel, accessories and footwear designed to appeal to teens and young adults. As of May 24, 2011, the Company operates 827 stores in all 50 states and Puerto Rico.

Pacific Sunwear of California Inc

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