PacSun announces annual results, files for Chapter 11 bankruptcy protection

Pacific Sunwear of California has announced that it and all of its subsidiaries have entered into a restructuring support agreement (RSA) with affiliates of Golden Gate Capital, the holder of its secured term loan provider under the company's financing facilities. The Plan provides a comprehensive roadmap for the company to continue to execute its strategy and position for long-term success.

The company also announced its financial results for the fourth quarter and fiscal year ending January 31, 2016.

“The plan negotiated with Golden Gate Capital and approved by our Board of Directors places PacSun in a very promising position as we continue the brand and merchandising transformation that our team has worked relentlessly to achieve. Importantly, great brand partnerships will remain paramount to PacSun's success and the Plan provides for all key suppliers to be paid in full following the effective date of the Plan," said Gary H. Schoenfeld, President and Chief Executive Officer.

Fourth quarter and FY financial results

The company’s net sales for the fourth quarter of fiscal 2015 ended January 30, 2016 were 232.9 million dollars versus 231.6 million dollars for the fourth quarter of fiscal 2014 ended January 31, 2015. Comparable store sales were slightly positive at 0.2 percent. The company ended the fourth quarter with 601 stores versus 605 stores a year ago.

On a GAAP basis, the company reported a net loss of 10 million dollars, or 0.14 dollar per diluted share compared to a net loss of 26 million dollars, or 0.38 dollar per diluted share, for the fourth quarter of fiscal 2015.

"Our slightly positive comp store sales performance was at the better end of what many retailers experienced over the Holiday season, which continues to validate our core strategies as we re-establish the new PacSun," added Schoenfeld.

Net sales for fiscal 2015 were 800.9 million dollars versus 826.8 million dollars for fiscal 2014. Comparable store sales decreased 2.6 percent during fiscal 2015. On a GAAP basis, the company reported a net loss of 8.5 million dollars, or 0.12 dollars per diluted share compared to a net loss of 29.4 million dollars, or 0.42 dollar per diluted share for the 2014 fiscal year.

Details of the restructuring plans

The parties intend to implement the Plan through a Chapter 11 process. So PacSun filed voluntary petitions to restructure under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. Under the Plan, PacSun will continue to operate its business without interruption to customers, vendors, partners and employees.

Pursuant to the Plan, Golden Gate Capital will be converting more than 65 percent of its term loan debt into the equity of the reorganised company and providing a minimum of 20 million dollars in additional capital to the reorganised company upon its emergence from Chapter 11 to support its long-term growth objectives. The company also announced that it has received a commitment for a flexible draw 100 million dollars in debtor-in-possession (DIP) financing from Wells Fargo Bank, National Association (Wells Fargo), the company's revolver lender. Wells Fargo has also committed to provide a five-year 100 million dollars revolving line of credit.