Pacific Sunwear of California
posted sharply lower earnings for its third quarter, hurt by weaker sales, an inventory writedown and costs related to the departure of its CEO.
Shares, however, moved higher in late trading after the surf-clothing retailer offered an optimistic outlook for the holiday period.
The company said Thursday that its third-quarter profit fell to $9 million, or 13 cents a share, from $40.5 million, or 54 cents a share, a year earlier.
The results included a charges of 10 cents a share for inventory writedowns, 3 cents a share for stock-option costs and pre-opening rent expenses, and 1 cent a share from the
departure of CEO Seth Johnson. Johnson, who had held the top spot for just a year and a half, left last month amid continued sales declines at the chain.
Sales for the third quarter fell to $375.4 million from $377.5 million, while same-store sales declined 6.7%.
"Although we are disappointed with our third quarter results, we are moving aggressively in an effort to reverse the trend,'' said Sally Frame Kasaks, interim chief executive, in a statement.
Kasaks said one her first goals as interm CEO has been to improve the appearance of the Pacific Sunwear stores by reducing inventory density. Inventory per square foot is down 5.6% from the same time a year ago, the company said.
"This step will allow us to accelerate key holiday deliveries, specifically in junior apparel, which we believe will help drive that business going forward," Kasaks said. "With lower inventory levels in our stores, we believe we can put our focus on improving our inventory turns, bringing fresh and exciting merchandise to our customers, and making the store environment much more shopper friendly."
For the fourth quarter, Pacific Sunwear sees earnings of 45 cents to 50 cents a share. Analysts, on average, project earnings of 46 cents a share, according to Thomson First Call.
Shares of Pacific Sunwear recently were up $1.23, or 7.1%, to $18.50 in late trading.