Pacific Sunwear of California, Inc. (PSUN)

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Pacific Sunwear of California, Inc. (PSUN)

F3Q09 Earnings Call

November 16, 2009 4:30 pm ET


Gar Jackson – Vice President of Investor Relations

Gary H. Schoenfeld – Chief Executive Officer

Michael L. Henry – Chief Financial Officer


Jeffrey Klinefelter - Piper Jaffray & Co.

Adrienne Tennant - Friedman, Billings, Ramsey

Christine Chen - Needham and Company

Paul Lejuez - Credit Suisse First Boston

Janet Kloppenburg - JJK Research

Jeffrey Van Sinderen - B. Riley & Co.

Liz Dunn - Thomas Weisel Partners

Mitch Kummetz - Robert W. Baird

Stacy Peck - SP Research

Connie Wong - Wedbush Morgan Securities

Liz Pierce - Roth Capital

Elizabeth Montgomery - Longbow

Dorothy Lakner - Caris & Company

Roxanne Meyer - UBS



Good afternoon. My name is Maggie and I will be your conference operator today. At this time I would like to welcome everyone to the Pacific Sunwear of California third quarter 2009 earnings conference call. (Operator Instructions) Thank you. Mr. Gar Jackson, you may begin your conference.

Gar Jackson

Thank you. Good afternoon and welcome to the Pacific Sunwear of California conference call announcing the company’s fiscal third quarter financial results. This is Gar Jackson, Vice President of Investor Relations. This call is being recorded and the playback will be available starting today approximately two hours after the call through midnight on November 23, 2009. It can be accessed at 800-642-1687 or 706-645-9291, pass code 38667329. The call will also be archived on the PacSun website at through midnight on March 11, 2010.

Your speakers today are Gary Schoenfeld, Chief Executive Officer and Mike Henry, Chief Financial Officer. Today’s call will be limited to one hour and questions will be limited to one per participant.

Before I turn the call over to Gary, I’d like to note that statements and discussions during today’s call will contain forward-looking information including forecasts of future financial performance and statements about our future prospects and proposed developments or business strategies. Actual results could differ materially from those projected or reflected in our forward-looking statements and reported results should not be considered an indication of future performance. The potential risks and uncertainties that could cause the company’s business and financial results to differ materially from those in the forward-looking statements are included in the company’s Form 10-K for the fiscal year ended January 30, 2009, and in subsequent filings with the SEC, as well as in the earnings press release included as an exhibit to the Form 8-K that we furnished to the SEC today. These documents can also be found in the Investor Relations section on our corporate website at

All information discussed on the call is as of today, November 16, 2009. Pacific Sunwear does not intend and undertakes no duty to update this information to reflect future events or circumstances.

This call, the webcast and its replay are the property of Pacific Sunwear. It is not for rebroadcast or use by any other party without the prior written consent of Pacific Sunwear.

With that said, I will now turn the call over to Gary.

Gary H. Schoenfeld

Thank you. Good afternoon, everybody and thank you for joining us. It’s been a little over four months since I took over as CEO and as a turnaround situation I knew there would be a number of issues we would need to tackle simultaneously and would like to give you an update as to how we are proceeding against our key strategic initiatives and then I will speak briefly about current business trends, after which Mike will give more detail on our Q3 results and Q4 outlook.

We are attacking our business with four essential priorities. First is people and culture -- the question was asked of me on my first call in August, was I going to make any changes to the leadership team. For obvious reasons, that was not something I could speak to publicly at that time, yet affecting a transformation in leadership, accountability, teamwork, and an absolute commitment to wow our customers every day are among my highest priorities.

In terms of leadership, we have five key positions that we are looking to fill with great talent and experience -- a GMM to drive our juniors business, a head of stores to lead our team of 11,000 store managers and brand reps who touch our customers every day, a Chief Marketing Officer that can help reconnect our customers with PacSun and our brands, an SVP of Operations and a Vice President of Merchandise Planning and Allocation.

I am quite excited about the caliber of candidates that share our vision for reestablishing PacSun as the leader in the teen market and look forward to hopefully announcing some key additions to our team as we go into the early part of next year. And yet at the same time, I can assure you we are not waiting to fill these key positions in order to affect change.

From a teamwork perspective, our team broadly defined has to include all functions here at headquarters, our field team across all 50 states, our more than 200 associates in our distribution center in Kansas, as well as each of the key brands that we work with and all of our key suppliers in Asia and other parts of the world. Each person and each function has to recognize its inter-dependencies and we have huge potential if we can truly collaborate, which I am quite confident this team is embracing.

Second is product -- historically Pac’s strength -- PacSun's strengths have been pretty narrowly in tees, fleece, swim, and footwear and to a certain degree PacSun has always had a denim business. I think it’s fair to say that fashion has only more recently become a focal point and with somewhat mixed results so far but certainly something that we feel like we can be a major player in as we go forward.

With respect to t-shirts, it’s simply a category that we have to lead and I know that we can. As it relates to footwear, I spoke last time on the importance of branded footwear and I am pleased to say we will be rolling out to 300 stores by Spring for young men’s and 200 stores for juniors.

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