Pacific Sunwear
And from the looks of the company's fourth-quarter and year-end results, it's doing a mighty fine job of it.
Earnings rocketed 63% to $23.2 million, or $0.46 a diluted share. For the year, Pacific Sunwear earned a whopping 80% more than in 2001, with net of $49.7 million, or $0.99 a diluted share.
Sales grew nearly 28% for the fourth quarter, with same-store sales jumping by 15.6%. Annual sales were up 23.6% to $846.4 million. Comps improved for the year by 9.7%.
The company generated $36.2 million in free cash flow (FCF) for the year, reversing in a big way 2001's negative FCF. The retailer also paid off virtually all of its long-term debt ($25 million) with all that cash generated from operations.
An interesting developing story involves Pacific Sunwear's d.e.m.o.-branded stores. At the close of its fiscal year, it operated 107 d.e.m.o. stores in 24 states. By contrast, it had 612 PacSun stores in 48 states at the end of the same period. The company sees a great deal of growth possible with the expansion of the d.e.m.o. concept.
It's easy to see why. The d.e.m.o. stores cater to an older crowd and have a very different focus, offering hiphop-inspired brands like Russell and Kimora Simmons' Phat Farm and Baby Phat, P. Diddy's Sean John line, and Jay-Z's Rocawear.
Pacific Sunwear will add 10 new d.e.m.o. stores in 2003, with the ultimate target of 200 over time. That may prove a conservative estimate.
Just as Pacific Sunwear introduced surfing clothes to kids living far from the actual sand and waves, it will do the same for suburban kids who want to dress like MTV's rap icons. It's genius. And with Pacific Sunwear behind it, it will likely work.
