All last year, and through the first quarter of this year, Pacific Sunwear (NASDAQ:PSUN) has struggled (and failed) to post even a modicum of earnings growth. Wall Street expects nothing different from the company when it reports its Q2 news Thursday afternoon. Will the analysts be proven wrong?

What analysts say:

  • Buy, sell, or waffle? Twenty-two analysts are PacSun worshipers. Eight of them rate it a buy, a dozen more say "hold," and a couple of them counsel selling.
  • Revenue. On average, they're looking for 9% sales growth, to $342.2 million.
  • Earnings. Profits are predicted to fall by half, to $0.07 per share.

What management says:
Like every other apparelier from Abercrombie (NYSE:ANF) to Zumiez (NASDAQ:ZUMZ), PacSun reported its July sales results in early August. Like many of these peers -- American Eagle (NYSE:AEO) and Aeropostale (NYSE:ARO), for example -- but unlike Target (NYSE:TGT) and Wal-Mart (NYSE:WMT), PacSun suffered sliding comps.

Also unlike those two worthies, PacSun announced that it will lose money this quarter, thanks to a $0.14-per-share charge to earnings for terminating leases at its 74 d.e.m.o. stores, and another $0.09 charge for "impairment to its One Thousand Steps retail concept." 

(If these numbers don't seem to add up to the $0.07 profit you see Wall Street predicting, there's a reason. The analysts backed out all of the charges in making their estimates, and they're giving you just a pro forma, pre-charges number.)

Upon reading the sales report, and in particular the news about the charges and closures, my Foolish colleague Seth Jayson summarized the news as follows: "The bottom has fallen out again, and the plunge [in PacSun's stock price] seems well-deserved."

What management does:
Second verse, same as the first. Along with weak sales and hefty charges, we see PacSun's margins continuing to deteriorate. It's been a long, unbroken downward slide for this chain over the last 18 months, and Thursday's news seems unlikely to break the pattern of disappointment.

Margins

1/06

4/06

7/06

10/06

2/07

5/07

Gross

36.4%

35.9%

34.9%

32.3%

31.1%

29.6%

Operating

14.2%

13.5%

12.3%

9.0%

4.7%

2.8%

Net

9.1%

8.5%

7.7%

5.5%

2.7%

1.5%
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ending in the named months.

One Fool says:
 Motley Fool Stock Advisor co-advisor Tom Gardner took a look of his own at PacSun's July report earlier this month and reached his own conclusions. Do they differ from Seth's? Can't tell you just yet. We don't release information contained in our updates until Stock Advisor members have had a good 30 days to chew it over first (as the saying goes, membership has its privileges.)

But I can tell you what Tom was thinking during his semiannual review of all picks on his side of the Stock Advisor portfolio. Back in May, Tom reminded us that the stock had

... come close to getting the axe from us a number of times ... Same-store sales are still quite weak, and the company plans to close down as many as 74 of its d.e.m.o. brand stores. But hopefully the concentration on the better-performing Pacific Sunwear and One Thousand Steps brands will help.

I fear Tom was right on d.e.m.o., but a bit too optimistic about One Thousand Steps. And feel free to insert here your own joke here about what PacSun actually stepped in.

American Eagle is a Motley Fool Stock Advisor selection. Wal-Mart is a Motley Fool Inside Value recommendation. Check out either (or both) of these market-beating newsletters with a free 30-day trial.

Fool contributor Rich Smith does not own shares of any company named above. Disclosure is always in fashion at The Motley Fool.