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Pacific Sunwear Of California's CEO Discusses Q4 2011 Results - Earnings Call Transcript

So as we look at the fourth quarter and the end of the year, sales from continuing operations were $234 million versus $238 million last year and for the total year were $834 million versus $837 million for 2010. As we stated in the press release, our overall business, which includes all stores opened during the fourth quarter, improved as we got further into the holiday-selling season, moving from a minus 3 comp store sales at the time of our last conference call to flat for the fourth quarter.

Given the highly promotional nature of the holiday season, we were also encouraged by our 150 basis point improvement in merchandise margins for continuing stores and the decline in non-GAAP net loss, which I will speak to in a moment.

GAAP net loss per share for the quarter was $0.56 as compared to $0.53 per share for the same period a year ago. On a non-GAAP basis, excluding store closure-related charges of $7 million and the loss on derivative liability, which Michael will explain as I said, and using the normalized annual income tax rate of approximately 37%, we reported a net loss of $0.19 per share as compared to a $0.31 loss on a comparable basis in the same period last year.

Comparable sales, which includes results for all stores opened during the fourth quarter, for Men's was a plus one, while the Women's side of the business was a minus one. Overall, the biggest shift we are seeing in our business is growth in our emerging and proprietary brands, offset by declines in some of our key heritage brands.

From a category perspective, denim and footwear had significant growth in both genders, while fleece, outerwear and Women's fashion tops fell short of our expectations.

Consistent with what we announced in December, we closed 119 stores during fiscal 2011, including 87 store closures during Q4 and ended the year with a store count of 733 stores. We continue to anticipate the closure of approximately 110 additional stores in 2012, with the vast majority of those closures taking place in the fourth quarter.

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