Ahead of the Bell: Pacific Sunwear

AP News
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Posted: Nov 17, 2009 9:05 AM

Slumping sales expectations dragged down shares of surf- and skatewear retailer Pacific Sunwear of California Inc. in premarket trading on Tuesday.

On Monday, the Anaheim, Calif., company posted a deeper third-quarter loss and said sales at stores open at least a year, a key retail measure, worsened in a "precipitous decline" toward the end of the quarter.

The chain projected the sales measure fell by at least 20 percent in the current quarter, following an 18 percent drop in the third quarter.

That led the retailer to forecast a loss of 28 cents to 35 cents per share in the fourth quarter. Analysts polled by Thomson Reuters had been expecting a smaller fourth-quarter loss of 11 cents per share.

"The fall-off in business leads us to look for a challenging holiday," said BMO Capital Markets analyst John Morris. The holiday shopping season is the most important time of the year for retailers.

FBR Capital Markets analyst Adrienne Tennant said heavy markdowns on merchandise were likely in the near future, because the chain was intent on clearing out inventory before spring. That could weigh on sales and profit.

Pacific Sunwear shares tumbled $1.14, or 22.8 percent, to $3.87 in premarket trading Tuesday.