Wipe Out

Pacific Sunwear of California Inc. (Anaheim, Calif.) announced that it will explore strategic alternatives for the company's demo stores and close its One Thousand Steps stores as soon as possible. The company said it made its decision after taking a comprehensive review and evaluation of its real estate portfolio and profit performance of the two chains.

“We believe the best way to enhance shareholder value at this time is to focus management's attention and capital on the core PacSun business,” said Sally Frame Kasaks, ceo, Pacific Sunwear. “Over the past two years, our demo team has made many efforts to improve this business. However, as is evidenced by our demo division comp store sales, the urban streetwear business has been very challenging. At this time, the board has chosen to explore strategic alternatives for this division.” Kasaks added that the company learned a great deal from its nine-store test of One Thousand Steps, but concluded that our shareholders were unlikely to benefit from the continued operation of the chain.

The company stated that the demo and One Thousand Steps stores collectively have generated a total pre-tax operating loss of approximately $21 million during the first three quarters of fiscal 2007 (excluding previously announced lease termination and asset impairment charges).

Pacific Sunwear operates 837 PacSun stores, 119 PacSun Outlet stores, 154 demo stores and 9 One Thousand Steps stores.