Following a particularly vicious storm, it's sometimes heartening to see the clouds part and the sun shine down again, even if it reveals the ruin left in its wake.
That's probably how investors in teen retailer Pacific Sunwear
It's to be expected that a clothing retailer that focuses on warm-weather activities like surfing and skateboarding would bask in the warmth of shoppers thinking about the coming spring and summer months. Yet PacSun hasn't been embraced by consumers (or investors) for awhile now, and other similarly positioned teen retailers -- Zumiez
Pacific Sunwear, however, looks like it might finally be catching a surf-worthy wave with its turnaround plan. First, CEO Sally Kasaks realized that PacSun is a clothing retailer that has connected with the surf and skate crowd for years. That meant getting rid of its urban-style demo stores and abandoning the folly of its One Thousand Steps shoe stores. Beach-girl chic probably never generated the "street cred" necessary for the demo to take hold, and women's footwear was hardly the underserved market it was touted to be when the shoe concept was launched.
Kasaks then made the smart move to focus on its core customer: the female shopper. Without ignoring the guys who shop the store (I've bought a few tees there over time), the stores are offering a wider selection geared toward girls: T-shirts, jeans, and, to a lesser extent, accessories.
PacSun has also made the connection that surf, skate, and ski are all closely interwoven. Similar to its support for the U.S. Amateur Surf Team, PacSun is sponsoring the amateur snowboard team, as well as stocking its shelves with Burton branded clothes and snowboards.
That's a lesson Quiksilver
What PacSun investors overlooked, and what management finally came to realize, was that while total same-store sales for the past year might have looked like a total wipeout because the demo business was absolutely horrendous, the PacSun concept was performing brilliantly. In the second half of 2007, the PacSun segment posted strong, positive comparable-sales figures that were masked by the company's failing demo and Thousand Steps stores.
Now that the company has stripped itself down to just its surf, skate, and ski skivvies, it's positioned to catch the rays of investor enthusiasm once more.
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