Pacific Sunwear of California is implementing a restructuring plan which will eliminate between 175-225 of their approximately 825 stores. These stores comprise between 21 to 27% of their stores and are the less profitable ones. They will then focus on their remaining 550-600 stores which are the more profitable ones.
In addition, Pacific Sunwear has taken a $60 million, five year term loan from the Golden Gate Capital private equity firm. It also has attained a $100 million, 5 year revolving credit line from Wells Fargo. The company’s CEO, Gary H. Shoenfeld, aims for Pacific Sunwear to become “the preferred destination among teens and young adults for great style and great brands.”
The company’s stock went down from $20 to $1.50 in 2008. Since then it has fluctuated between $1.00 and $6.70. The stock is currently selling at 1.32 so it’s cheap. If one has confidence in the management to turn their situation around, now would be the time to pick up this stock.
Some of the leading managers of Pacific Sunwear are Charles Mescher, Christine Lee, and Jonathan W. Brewer.
Disclaimer: The information in this article is insufficient to base investment decisions on. All decisions should be based on a thorough analysis of the investment.
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