Updated from 4:39 p.m. EST Pacific Sunwear ( PSUN) continues to bask in the sun. The surf and skate clothing retailer posted a 38.7% rise in fourth-quarter per share earnings as sales soared. Not only did the company beat expectations, but it bumped up expectations for 2004. Nevertheless, PacSun shares were recently down 83 cents, or 3.3%, to $24.08 in after-hours trading. Shares rose 20 cents, or 0.8%, to $24.91 in Tuesday's regular session. In the holiday quarter, PacSun earned $34.35 million, or 43 cents per diluted share, compared with $23.21 million, or 31 cents a share, in the same period a year earlier. The company had previously announced that its sales in the quarter rose 22.9% to $326.32 million. Analysts were expecting PacSun to earn 42 cents a share on $322.24 million in sales. Last month, the company raised its outlook for the quarter by a penny to 42 cents a share. For 2004, the clothing chain expects its earnings per share to jump about 20% above last year's $1.02 a share to about $1.22 per share. The company projects its same-stores sales, which compare results at outlets open more than a year, will rise 5%. The company also affirmed analysts' first-quarter earnings estimates. In the first quarter, Wall Street is looking for earnings of 14 cents a share on sales of $231.31 million. For the year, analysts predicted profits of $1.21 per share on $1.19 billion in sales. PacSun rode a wave of sales at its older stores in the fourth quarter. The company posted same-store sales growth of 12% in the quarter. But the company also benefited from cost controls. Its gross profit margin -- which represents the difference between what a company charges customers for its products and its direct costs of acquiring and providing them -- swelled by 70 basis points as a portion of sales to 35.47%. Meanwhile, PacSun's operating expenses -- which include marketing, general and administrative costs -- fell 1.79 percentage points to 19.79% of sales. The decline in PacSun's costs as a portion of sales was largely due to its strong sales growth in the quarter, said Carl Womack, the company's CFO, during a conference call with analysts and investors. Sales grew faster than the company's occupancy and payroll costs, as well as its other store expenses. Other operating and selling costs either grew at the same rate as sales or slightly faster, Womack said.