Pacific Sunwear (PSUN) Closing 74 Underperforming Demo Stores; Guides Lower

Pacific Sunwear of California, Inc. (Nasdaq: PSUN) announced that it intends to close 74 underperforming demo stores that have not met the Company's financial operating criteria.

As a result of this action, the Company expects to record a pre-tax non-cash charge of approximately $25 million to $27 million related to asset impairment and inventory write down costs in the fourth quarter of 2006. The Company also expects to incur cash charges during fiscal 2007 of approximately $10 million to $15 million attributable to lease termination, severance and contingent agency fee costs.

The Company today also reported that total sales for the five weeks of fiscal January ending February 3, 2007 were $96.9 million. Total Company same-store sales for the five-week period decreased 7.7 percent when compared to the same five-week period last year, which includes week one of February of fiscal 2006 for year-over-year comparison purposes.

Due to weaker than expected sales in January, resulting in higher than expected markdowns during the period, and excluding the estimated $0.22 to $0.24 per diluted share fourth quarter impairment charge associated with closing the 74 underperforming demo doors, the Company anticipates fiscal 2006 fourth quarter earnings in the range of $0.36 to $0.38 per diluted share and earnings per share for fiscal year 2006 to be in the range of $0.78 to $0.80 per diluted share. The consensus is $0.47 and $0.89, respectively.

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