Pacific Sunwear Announces Fiscal 2006 Fourth Quarter and Year End Results

Pacific Sunwear Announces Fiscal 2006 Fourth Quarter and Year End Results

Provides Outlook for First Half of Fiscal 2007

Pacific Sunwear of California, Inc. (Nasdaq:PSUN) today reported its financial results for the fourth quarter and fiscal year ended February 3, 2007 (”fiscal 2006″) and commented on its outlook for the first half of fiscal 2007.

Fourth Quarter Results

For the fourth quarter of fiscal 2006 (14 weeks), total sales were $458.2 million, an increase of 7.8 percent over total sales of $424.9 million for the fourth quarter of fiscal 2005 ended January 28, 2006 (13 weeks). Same-store sales decreased 4.3 percent for the comparable fourteen-week period ended February 3, 2007.

Net income for the fourth quarter of fiscal 2006 was $9.1 million, or $0.13 per diluted share, compared to $47.0 million, or $0.63 per diluted share, in the fourth quarter of fiscal 2005. Fourth quarter results for fiscal 2006 include asset impairment and inventory write-down charges of approximately $16.6 million net of tax, or $0.24 per diluted share, primarily attributable to the Company’s previously announced plans to close 74 underperforming demo stores during fiscal 2007. Before the impact of these charges, net income for the fourth quarter of fiscal 2006 was $25.7 million, or $0.37 per diluted share, versus a comparable non-GAAP income of $45.2 million, or $0.60 per diluted share, for the fourth quarter of fiscal 2005.

Fiscal 2006 Results

Total sales for fiscal 2006 (53 weeks) were $1.45 billion, an increase of 4.0 percent over total sales of $1.39 billion for fiscal 2005 (52 weeks). Same-store sales decreased 4.7 percent for the comparable 53 week period ended February 3, 2007.

Net income for fiscal 2006 was $39.6 million, or $0.56 per diluted share, compared to $126.2 million, or $1.67 per diluted share, for fiscal 2005. Before the impact of the impairment charges noted above and the charge taken in the third quarter related to a severance obligation to our former CEO, net income for fiscal 2006 was $56.9 million, or $0.80 per diluted share, versus a comparable non-GAAP $117.5 million, or $1.55 per diluted share, for fiscal 2005.

Interim Chief Executive Officer Sally Frame Kasaks commented, “Although fiscal 2006 was disappointing from an earnings standpoint, we have moved aggressively to get the Company back on track and positioned for future growth. Key to this effort has been decreasing the inventory density in our stores to enable us to offer a clearer and more compelling merchandise presentation to our customers. We are also moving forward with our plans to close down 74 underperforming demo stores to improve the profitability of the division. Finally, we have introduced updated store design packages for both PacSun and demo, which are receiving encouraging initial responses.”