On March 15, Pacific Sunwear
- Net income declined almost 81% because of store closure costs and higher inventory writedown charges during the quarter.
- Despite a rise in sales, operating margin declined by 1,430 basis points. Talk about a wipeout!
- The company will close 74 underperforming demo stores in the first half of fiscal 2007.
- Management provided EPS guidance for first half of fiscal 2007 in the range of $0.23 to $0.27, where it excluded the lease termination and severance costs.
(Figures in millions, except per-share data.)
Income Statement Highlights
Q4 2006 |
Q4 2005 |
Change |
|
---|---|---|---|
Sales |
$458.2 |
$424.9 |
7.8% |
Net Profit |
$9.1 |
$47.0 |
(80.7%) |
EPS |
$0.13 |
$0.63 |
(79.4%) |
Diluted Shares |
69.8 |
74.8 |
(6.7%) |
Get back to basics with the income statement.
Margin Checkup
Q4 2006 |
Q4 2005 |
Change* |
|
---|---|---|---|
Gross Margin |
31.5% |
36.3% |
(4.8) |
Operating Margin |
3.0% |
17.4% |
(14.3) |
Net Margin |
2.0% |
11.1% |
(9.1) |
Margins are the earnings engine.
Balance Sheet Highlights
Assets |
Q4 2006 |
Q4 2005 |
Change |
---|---|---|---|
Cash + ST Invest. |
$83.8 |
$170.1 |
(50.8%) |
Inventory |
$205.2 |
$215.1 |
(4.6%) |
Liabilities |
Q4 2006 |
Q4 2005 |
Change |
---|---|---|---|
Accounts Payable |
$66.6 |
$47.6 |
40.0% |
The balance sheet reflects the company's health.
Cash Flow Highlights
2006 |
2005 |
Change |
|
---|---|---|---|
Cash From Ops. |
$161.6 |
$184.3 |
(12.3%) |
Capital Expenditures |
$157.8 |
$109.2 |
44.5% |
Free Cash Flow |
$3.9 |
$75.1 |
(94.9%) |
Free cash flow is a Fool's best friend.
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