(Adds company comment, charges, background)
NEW YORK Jan 4 Pacific Sunwear of California
Inc PSUN.O, the surfing-inspired teen clothing retailer, said
on Friday that it would close its struggling chain of 154 demo
stores "as soon as is practical" and take a charge of up to $50
"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 a
In October, Pacific Sunwear said it would close its trendy
One Thousand Steps shoe boutiques and was exploring
alternatives for demo, which sells urban-inspired clothing.
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
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.
(Reporting by Nicole Maestri, editing by Lisa Von Ahn)