On May 21, Pacific Sunwear (NASDAQ:PSUN) released first-quarter earnings for the period ended May 5.

  • Earnings at PacSun plummeted to negative territory, as the retailer lost $5.1 million in the first quarter.

  • Although total sales increased 6.9%, comparable-store sales fell 1.2%, dragged down by demo locations, which posted a 12.1% decrease in comps.

  • Despite the losses, the company stood by its outlook for the second quarter: It expects to earn $0.18 to $0.20 per diluted share, with low-single-digit same-store sales growth.

(Figures in millions, except per-share data.)

Income Statement Highlights

Q1 2007

Q1 2006

Change

Sales

$320.6

$299.9

6.9%

Net Profit

($5.1)

$11.9

N/A

EPS

($0.07)

$0.16

N/A

Diluted Shares

69.9

73.7

(5.1%)

Get back to basics with the income statement.

Margin Checkup

Q1 2007

Q1 2006

Change*

Gross Margin

74.2%

67.6%

6.6

Operating Margin

(2.9%)

5.8%

N/A

Net Margin

(1.6%)

3.9%

N/A

*Expressed in percentage points.

Margins are the earnings engine.

Balance Sheet Highlights

Assets

Q1 2007

Q1 2006

Change

Cash + ST Invest.

$42.7

$107.7

(60.35%)

Inventory

$210.2

$222.2

(5.4%)

Liabilities

Q1 2007

Q1 2006

Change

Accounts Payable

$68.5

$45.4

50.9%

The balance sheet reflects the company's health.

Cash Flow Highlights

Q1 2007

Q1 2006

Change

Cash from Ops

($9.4)

$1.4

N/A

Capital Expenditures

$32.4

$29.1

11.2%

Free Cash Flow

($41.7)

($27.7)

N/A

Free cash flow is a Fool's best friend.

Related Foolishness:

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Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so check Fool.com for more of our in-depth discussion of what the numbers mean.

At the time of publication, Fool contributor Mike Cianciolo held no position in Pacific Sunwear.