This summary is based on the first quarter fiscal 2007 earnings call conducted by Pacific Sunwear of California, Inc. (PSUN: chart) on May 21, 2007.

Interim Chief Executive Officer: Sally Frame Kasaks
Senior Vice President and Chief Financial Officer: Gerald M. Chaney

Key Investors Issues

- EPS were a loss of 7 cents a share compared to a profit of 16 cents a share last year.
- There was a net loss of $5.06 million compared to profit of $11.9 million a year ago.
- Revenue was $320.6 million compared to $299.9 million last year.

First Quarter Highlights

Total GAAP sales were $320.6 million, an increase of 6.9% over total sales of $299.9 million during the first quarter of fiscal 2006 ended April 29, 2006.

Total company same store sales decreased 1.2%. Due to the 53rd week in fiscal year 2006, comparable store sales for the first quarter are compared to the 13 week period ended May 6, 2006. By concept, PacSun same store sales increased 0.5% and demo same store sales decreased 12.1%.

- At PacSun junior’s business was up low double digits, guys’ business was flat and accessories and footwear were down high single digits.
- In demo, juniors business was down high single digits and guys’ business was down mid teens.

The company recorded a net loss of $5.1 million or 7 cents per share, compared to net income of $11.9 million, or 16 cents per share, for the first quarter of fiscal 2006.

Lease termination charges and additional inventory impairment costs associated with the previously announced 74 demo store closures accounted for 3 cents per share of the loss.

Total transactions per comparable store were up mid single digits.

- The average sale per comparable store was down mid single digits driven by low single digit decrease in average unit sold at a mid single digit decrease in average unit retail.
- Gross margin, including buying, distribution and occupancy cost, not including the demo store closings was 26.9% versus 32.4% in the first quarter of last year.
- The 520 of the 550 basis point, basis point decrease was due to additional mark downs at cost that were taken after weaker than expected April coupled with planned mark downs associated with permanent mark down practice.
- The lower gross margin also reflects the de-leveraging of fixed expenses due to the negative comparable store sales.
- IMU was down 10 basis points.

Selling and G&A as a percentage of sales increased 200 basis points to 28.7% versus 26.7% last year.

The primary brands include 90 basis points attributable to store payroll that was largely impacted by the addition of 61 net new stores and the minimum wage increase that occurred in some states. The 50 basis points of the increase were due to additional depreciation associated with the 61 net added stores and the accelerated depreciation impact of the Refresh and Lab stores. The 30 basis points of the increase were due to consulting fees associated with brand study and 10 basis points of the increase are attributable to recruiting expenses. The remaining 20 basis points of the increase were attributable to the de-leveraging of miscellaneous expenses as a result of the negative same-store sales. Cash and investments was $42.7 million and working capital was a $171 million.

Total inventories were down 11.4% per square foot at cost.

- Capital expenditures were $32.3 million versus $29.1 million last year.
- Depreciation and amortization was $18.7 million.

- Total square footage increased 6.7% year-over-year and the company opened four new stores.
- Store base was 1183 stores totaling approximately 4.3 million square feet consisting of 845 PacSun stores, a 117 Outlet stores, 212 demo stores and 9 One Thousand Steps stores. These store counts include 60 remaining demo stores that the company is in the process of closing.

Pacific Sunwear’s future financial condition and results of operation as well as any forward-looking statements are subject to change and to inherent known and unknown risks and uncertainties.

Pacific Sunwear does not intend and undertakes no obligation to update its forward-looking statements to reflect future events or circumstances.

Actual results may differ from current expectations based on a number of factors affecting Pacific Sunwear’s businesses, including changes in consumer demands and preferences, lower than anticipated comparable store sales, higher than anticipated markdowns, competition from other retailers, and uncertainties generally associated with apparel retailing.