For all the sunny talk I've been giving about Pacific Sunwear (Nasdaq: PSUN), the same-store sales numbers the teen retailer posted would seem to give the lie to the notion that better days are ahead. Total sales fell 8% for the five-week period of March, while comps were down a similar percentage. That's a whole lot worse than the 1.7% decline analysts were expecting.
As dismal as those numbers sound, I'm not certain they're as bad as they appear. Call me an eternal optimist when it comes to PacSun, but I'm still seeing some silver linings on the clouds here.
It's undoubtedly a sign of current economic conditions, but many retailers in the sector posted even worse numbers than PacSun's. Abercrombie & Fitch (NYSE: ANF), American Eagle Outfitters (NYSE: AEO), and Wet Seal (Nasdaq: WTSLA) all reported comps that were down in the 10% to 12% range. Sure, Aeropostale (NYSE: ARO) rose 2.5% and beat expectations. But only Buckle (NYSE: BKE), which trounced expectations with a 21% increase in comps, actually had something to crow about.
So, just because everyone else is doing badly, that means PacSun is OK? Well yes. Since the start of the fiscal year, which for most retailers began in February, Pacific Sunwear's stock price has been one of the best performers, suggesting that it's been weathering the economic downpour better than its rivals.
With a new focus on its core PacSun brand, the sales results are based on leaner operations, which I believe allows the retailer to remain poised to reward investors in the long run. The Easter holiday came early this year -- the earliest calendar appearance in 95 years -- so it shouldn't be too surprising that spring outfits weren't on shoppers' minds, a typical push for the season.
I'm not such a Pollyanna as to ignore that weaker comps won't delay the onset of the recovery I've been expecting. But in a mix of teen retailers, I see PacSun holding up better than most and I don't anticipate April showers forestalling its resurgence any longer.
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