While retailers' fortunes have been fickle in recent times, Pacific Sunwear of California (NASDAQ:PSUN) is still basking in the rays. Last night after market close, the retailer reported first-quarter earnings that show it's riding the wave of certain teenage fashion trends.
The retailer, which runs two stores that appeal to surfer and skater and hip-hop fashions, posted first-quarter earnings up 88% at $15.0 million, or $0.19 per share. Sales increased nearly 24% to $245.1 million, and same-store sales were 12.7% higher.
Further, Pacific Sunwear now expects full-year earnings of $1.31 per share, as compared to the $1.26 per share previously anticipated. Having already completed a $50 million stock repurchase, Pacific Sunwear plans to buy back $25 million additional shares.
Pacific Sunwear is one of those retailers that has been resonating well with that unfettered, sweet spot of the consumer arena, the teenager. Other retailers that court that same demographic include Urban Outfitters (NASDAQ:URBN), Hot Topic (NASDAQ:HOTT), and Abercrombie & Fitch (NYSE:ANF), with varying degrees of success.
When it comes to the specific niche of kids who are into surf and skate apparel, Pacific Sunwear competes with names like Vans (NASDAQ:VANS) and Quiksilver (NYSE:ZQK).
As was pointed out after last quarter's solid showing, Pacific Sunwear is still projecting what seems to be a conservative 5% growth in same-store sales for the year, considering evidence that it has a good idea of what a lot of kids want. Its new estimate forecasts an annual earnings jump of 28% from last year's levels.
Though the stock bounced upwards during after-hours trading last night, it only inched up earlier today (and has since dipped), and is currently trading at 16 times forward earnings. While investors seem to be taking a conservative approach to the stock, with summertime fast approaching, it sounds like a good time to take a closer look at the sunny outlook provided by Pacific Sunwear.
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Alyce Lomax does not own shares of any of the companies mentioned.
