Pacific Sunwear Wipeout?: Fool by Numbers (PSUN)

Pacific Sunwear Wipeout?: Fool by Numbers

By Motley Fool Contributors | More Articles
March 16, 2007 | Comments (0)

On March 15, Pacific Sunwear (Nasdaq: PSUN ) released fourth-quarter earnings for the period ended Feb. 3.

Net income declined almost 81% because of store closure costs and higher inventory writedown charges during the quarter.
Despite a rise in sales, operating margin declined by 1,430 basis points. Talk about a wipeout!
The company will close 74 underperforming demo stores in the first half of fiscal 2007.
Management provided EPS guidance for first half of fiscal 2007 in the range of $0.23 to $0.27, where it excluded the lease termination and severance costs.

(Figures in millions, except per-share data.)

Income Statement Highlights

	Q4 2006	Q4 2005	Change
Sales	$458.2	$424.9	7.8%
Net Profit	$9.1	$47.0	(80.7%)
EPS	$0.13	$0.63	(79.4%)
Diluted Shares	69.8	74.8	(6.7%)

Get back to basics with the income statement.

Margin Checkup

	Q4 2006	Q4 2005	Change*
Gross Margin	31.5%	36.3%	(4.8)
Operating Margin	3.0%	17.4%	(14.3)
Net Margin	2.0%	11.1%	(9.1)

*Expressed in percentage points

Margins are the earnings engine.

Balance Sheet Highlights

Assets	Q4 2006	Q4 2005	Change
Cash + ST Invest.	$83.8	$170.1	(50.8%)
Inventory	$205.2	$215.1	(4.6%)

Liabilities	Q4 2006	Q4 2005	Change
Accounts Payable	$66.6	$47.6	40.0%

The balance sheet reflects the company's health.

Cash Flow Highlights

	2006	2005	Change
Cash From Ops.	$161.6	$184.3	(12.3%)
Capital Expenditures	$157.8	$109.2	44.5%
Free Cash Flow	$3.9	$75.1	(94.9%)

Free cash flow is a Fool's best friend.

PacSun is a Motley Fool Stock Advisor recommendation. For more stock selections from the Fool's best-performing newsletter, sign up today for your free 30-day trial.

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