Pacific Sunwear, Talbots closing non-core chains

NEW YORK -- Retailers Pacific Sunwear of California psun and Talbots tlb both announced Friday that they will close chains that did not fit their core business.

Pacific Sunwear the surfing-inspired teen clothing retailer, will close its struggling chain of 154 demo stores,, which sell urban-inspired clothing, "as soon as is practical" and take a charge of up to $50 million.

"It is in the best interests of our investors to close our remaining demo stores and concentrate our efforts on our core business," Chief Executive Sally Frame Kasaks said.

In October, Pacific Sunwear said it would close its trendy One Thousand Steps shoe boutiques and was exploring alternatives for demo. Wall Street had complained for years that demo was a drain on profits at Pacific Sunwear.

Demo, which launched in 1998, has struggled to find an audience at malls for hip-hop fashions that are at odds with the colorful, California surfing-inspired looks seen at Pacific Sunwear's main chain of PacSun stores.

Sales at stores open at least a year, a key gauge of retail performance, had been in a slump at demo.

Due to the demo store closures, Pacific Sunwear said it expected to incur pretax charges of $35 million to $50 million for items like severance payments, inventory reserves and lease terminations.

The company expects to incur $3 million to $4 million of the charges in the fourth quarter ending on Feb. 2 and the rest in the first quarter ending on May 3.

Talbots will close 78 kids' and men's stores by September and discontinue those businesses as part of a bid to focus more on its core customer — women 35 and older.

The company also said its fourth-quarter sales so far were trending lower for both its Talbots and J.Jill brands.

Talbots said it will close 66 Talbots Kids stores and 12 Talbots Mens stores in a move that will affect about 800 full- and part-time jobs, or about 5% of the total Talbots workforce, the company added.

The retailer said the decision to close the brands was part of the company's strategic business review first announced in October.

In that review, Talbots said it found the concepts did not "demonstrate the potential to deliver acceptable long-term return on investment."

Talbots said it will redirect resources to its other businesses.

The company said total revenue would be affected by about $100 million a year. The chain added it should realize operational benefits of about $13 million to $15 million, or 15 cents to 18 cents a share, each year.

Talbots also said it expects to record pretax expenses for the closings of about $5 million, or 6 cents a share, in the fourth quarter and expenses of about $34 million to $42 million, or 40 cents to 49 cents a share, in fiscal 2008.