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What: Shares of teen-oriented retailer Pacific Sunwear (NAS: PSUN) were covered in clouds today as investors hit the stock with a big thunderbolt. Shares tumbled as much as 42% after the company gave a disappointing earnings report.
So what: As the results fromAmerican Eagle Outfitters (NYS: AEO) and other competitors have shown, it's simply a tough time to be a teen retailer. But for PacSun, which has its own challenges in addition to the broader economic issues, the environment is murder.
On the bright side, the company topped analysts' earnings estimates for the second quarter, as it reported a non-GAAP loss per share of $0.18 versus the anticipated $0.24 loss. It also managed positive same-store-sales growth of 1%. However, guidance for the third quarter has same-store sales falling in the mid- to high single-digit range, and the loss per share coming in between $0.10 and $0.18. Wall Street had been expecting the loss per share to improve to $0.05.
Now what: I can't sum it up better than PacSun CEO Gary Schoenfeld: "Until recently we had expected this positive momentum to continue, yet we are now more cautious in our near term outlook due to a combination of factors including macroeconomic pressure, along with a highly promotional start to the back to school season."
And that, ladies and gents, is, in a nutshell, why the stock is getting absolutely shellacked today. Want to keep up to date on these stocks?
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