Pacific Sunwear to close remaining 154 demo stores
08 Jan '08
3 min read
Pacific Sunwear of California Inc reported that it will close its remaining 154 demo stores as soon as is practical. The determination to take this action followed a review of strategic alternatives for its demo division, as previously announced in October 2007.
In February 2007, the Company announced the planned closure of 74 underperforming demo stores, all of which were closed as of the end of May 2007.
Pacific Sunwear's Chairman and Chief Executive Officer Sally Frame Kasaks commented: "As we previously announced, we strongly believe that the best course for enhancing shareholder value is to focus our attention and resources on the PacSun business.
We engaged an outside financial advisor to help us carefully evaluate strategic alternatives for demo and have determined on the basis of this review that it is in the best interests of our investors to close our remaining demo stores and concentrate our efforts on our core business."
As a result of this decision, the Company expects to incur aggregate pre-tax charges in the range of approximately $35 million to $50 million for anticipated lease terminations, employee severance charges, inventory reserves, and agency fees.
Approximately $3 million to $4 million of such charges are expected to be incurred during the fourth quarter of fiscal 2007 ending February 2, 2008.
These charges were not reflected in the Company's previously given GAAP earnings guidance for the fourth quarter of fiscal 2007.
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