Pacific Sunwear Popped: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of teen fashion retailer Pacific Sunwear (Nasdaq: PSUN  ) popped 8% in intraday trading today on no apparent news.

So What: Your guess is as good as mine as to why there’s sudden, spiking interest in this teen retailer’s shares. The retail landscape’s fraught with difficulties these days, and Pacific Sunwear has reported dwindling sales and posted annual losses for the last two fiscal years, and annual comps for the year ended January 2010 plunged a nauseating 20%.

Now What: Investors should avoid becoming infected with unsubstantiated bullishness about Pacific Sunwear shares right now. It faces formidable competition in the teen retail space from companies like Abercrombie & Fitch (NYSE: ANF  ) , Zumiez (Nasdaq: ZUMZ  ) , Aeropostale (NYSE: ARO  ) , and Buckle (NYSE: BKE  ) , just to name a few. If there’s no apparent reason why Pacific Sunwear’s popping today, following suit and snapping up shares may be an unreasonable move investors could come to regret.

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