Surf's Up at Pacific Sunwear

Pacific Sunwear (NASDAQ:PSUN) is clearly on another hot streak. After the bell yesterday, the teen apparel retailer reported that second-quarter net income climbed 44% to $19.3 million, or $0.25 per share, as sales grew 17.2% to $274.8 million. Overall, company same-store sales increased 6.8%. Meanwhile, same-store sales at the company's PacSun stores, which offer surf and skate apparel, were up 7.2% in the quarter, with same-store sales at the urban-inspired d.e.m.o. stores up 3%.

As planned at the last quarterly report, Pacific Sunwear also said that it repurchased approximately 1.3 million shares for about $24.9 million, at an average price of $19.26 per share. Through the first half of the year, the company has bought back $74.9 million in stock at an average price of $21.30 per share.

Looking ahead, the company projected 5% same-store sales growth for the third and fourth quarters, adding that it was comfortable with earnings forecasts of $0.39 and $0.52 per share for those quarters. With the strong second-quarter performance, the company upped its full-year earnings expectation another four pennies to $1.35 per share.

Pacific Sunwear also outlined its plan for 2005, saying it would open approximately 120 net new stores, including 70 PacSun, 10 PacSun Outlet, and 40 new d.e.m.o. stores. Factoring in the expansion and relocation of 30 to 35 other stores, the company forecast square-footage growth of about 14% next year.

The trendy retailer has been successful hitting the same crowd, as have surf and skate apparel companies Billabong and Quiksilver (NYSE:ZQK), while its d.e.m.o. stores reach a more hip-hop-oriented crowd. The stock may also be worth a look at 13.5 times the company's projected 2004 earnings.

For more Fool coverage and commentary on Pacific Sunwear, check out:

• Pacific Sunwear: Totally Awesome?, by Alyce Lomax
• Pacific Sunwear Catches a Break, by Dave Marino-Nachison
• PacSun Shines and Hip-Hop Investing, by LouAnn Lofton

Fool contributor Jeff Hwang owns none of the companies mentioned above.