Fiscal 2004 continues to be a good one for teen retailer Pacific Sunwear of California
The company's d.e.m.o. chain was a big driver. The traditional PacSun and outlet stores, which offer surf-themed apparel, have performed well, but d.e.m.o. -- inspired by hip-hop and targeting a slightly older, higher-paying customer -- has done it one better.
In Q3, same-store sales at d.e.m.o. rose nearly 20%, while PacSun managed "only" a 13.2% boost. For the first nine months, d.e.m.o. "comps" are up more than 25%.
Perhaps best of all, the marked difference between the two means the chains can (and do) coexist happily in the same mall. This helps the company as a whole, particularly as it contends with Gap
d.e.m.o. has contributed to another positive trend: Over the last three years, the company's revenue mix has changed, with women's apparel growing from 26% of sales in fiscal 2001 to 31% in fiscal 2003. (Accessories and footwear are also up as a percentage of total sales, helping results at both chains.) Retailers covet female shoppers, as they're considered likely to spend more and shop more often.
CEO Greg Weaver, interviewed here back in 2000 just as d.e.m.o. was starting to take off, visualizes a future with d.e.m.o. representing about 400 of a total 1,400 projected stores within the next four years or so. (Currently the chain accounts for 121 of its 863 stores.)
Back when Pacific Sunwear began rolling out d.e.m.o. in earnest, investors would have been right to harbor concerns about their company branching out after decades in its "bread-and-butter" surfwear business. In hindsight, however, it's clear the company prepared well -- and has followed through.