PacSun Closes Steps, Looks for New Solutions for Demo

Pacific Sunwear announced on Oct. 24 that it will shutter its nine-store footwear retailer, One Thousand Steps, and that it will search for an investment banker to help it find “strategic alternatives” for its 154 urban-themed demo stores.

The Anaheim, Calif.–based retailer’s core business is its 837 Pacific Sunwear surf and skate stores, and the company will shift its focus to its core business, said Sally Frame Kasaks, the retailer’s chief executive.

In a prepared statement, Kasaks said that demo merchants had tried to change the urban retailer’s long-suffering business for the past two years to no avail. In the past year, Pacific Sunwear had made moves to scale back demo’s business. In February, Kasaks announced that the company would close 74 demo stores.

One Thousand Steps debuted April 2006 at the Galleria at Tyler shopping center in Riverside, Calif. Kasaks said one reason for the footwear retailer’s closure was that her company’s shareholders would not benefit from the continued operation of the chain.

One Thousand Steps and demo both had generated a total pre-tax operating loss of $21 million during the first three quarters of the 2007 fiscal year. Despite the tough news, retail analyst Liz Pierce thought the future was bright for Pacific Sunwear. “We believe the core Pacific Sunwear brand still has a lot of growth opportunities,” she wrote in a research note dated Oct. 25. Pierce works for Roth Capital Partners, based in Newport Beach, Calif.—Andrew Asch