Pacsun Risks Wipeout

July 22, 2012 | By | Add a Comment

July 9 (Bloomberg) — Pacific Sunwear of California Inc., which made surf and skate styles cool for millions of U.S. teens, is trying to avoid a wipeout.

After popularizing such brands as Quiksilver and Hurley, PacSun, as it’s known, alienated customers by trying to sell its own apparel. Many decamped. So did investors; the shares have fallen 92 percent in the past five years. Now, as PacSun tries to win back hearts and minds by retreating to its original strategy, it faces growing competition from Zumiez Inc. and Tilly’s Inc., which sell similar gear.

PacSun “lost credibility with their core market,” David King, a senior research analyst at Roth Capital Partners LLC, headquartered in Newport Beach, California, said in a telephone interview. “The question is, ‘can they get back to that?’”

It’s not as though action-sports apparel is becoming less trendy. Fueled by the popularity of the Extreme Games on ESPN, sales of skateboards, surf apparel, footwear and accessories were $17 billion in 2010, the last year for which figures are available, according to Board-Trac, an industry consultant based in Trabuco Canyon, California.

And while consumers are still spending tentatively, surf- and skate-inspired apparel retailers may have an opportunity to grab a bigger part of the teen spending pie. Teens are moving away from the “preppy” graphic Ts and hoodies sold by Abercrombie & Fitch Co. and American Eagle Outfitters Inc. to an eclectic mix of lifestyle brands, fueling the success of retailers like Tilly’s and Zumiez, Richard Jaffe, an analyst at Stifel Nicolaus & Co. in New York said in a May 29 note.


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