We would have expected customer care to have improved at Pacific Sunwear (PSUN – $6.85) over the past three months since new CEO Gary Schoenfeld boldly suggested that PacSun was “aggressively shifting toward a much more customer focused environment.” 

To the contrary, we have noticed that the selling culture at many PSUN stores has actually deteriorated in recent months.  Store staffing is light, sales associates are uneducated about the merchandise, and many show a general disinterest in assisting customers today. 

Q2 2009 Conference Call – 08.20.2009 – Gary Schoenfeld, CEO:

“Historically, I don’t believe that PacSun has enjoyed a great selling culture in our stores, and that the emphasis really has been much more about standards, which are important, but in my opinion can’t come at the expense of putting customers first. I’ve been in a bunch of our stores as of late, and I’ll be in a lot more over this next weekend. And while cultures can’t change completely overnight, I think it’s fair to say we’re aggressively shifting toward a much more customer focused environment, and I believe that this can have an immediate impact on our results.” 

We witnessed this PSUN store associate in Fresno, CA ignore customers while he focused on a female customer for well over 30 minutes.

Today’s EAT quarterly conference call with analysts may have qualified as one of the worst managerial performances this year.  The vague disavowing of EPS guidance was a head scratcher and the excuse of bloated costs (“investing in our people”) was disingenuous at best.   

Take a look at this exchange on the conference call in which EAT management attempted to answer a question related to EPS guidance.  Did they disavow the original full year EPS guidance of $1.15 to $1.30?   

Bryan Elliott  - Raymond James – Analyst

Okay. Last clarification from me, the lack of explicit guidance in the press release.  I think there is some uncertainty out there about what that means.  Not repeating it means it hasn’t changed?  Or, has it been suspended?  And, can you give us sort of a policy statement for future reference?    

Chuck Sonsteby  - Brinker International, Inc. – EVP, CFO

Thanks for giving us that opportunity, Bryan.  I think really what we wanted to move to is we will give an annual guidance at the start of the year and then kind of go from there.  We’ve talked about what we think our upcoming quarters’ marketing strategies will be.  Everybody has got a pretty good idea today of what we talked about on cost of sales.  So we would anticipate that folks would just derive their estimates off of that information.  

Bryan Elliott  - Raymond James – Analyst

So I guess I am still confused then. That means that –?  

Chuck Sonsteby  - Brinker International, Inc. – EVP, CFO

We’re not going to update guidance on a quarterly basis.  

Bryan Elliott  - Raymond James – Analyst

So that means it’s suspended?  Or, the $1.15 to 1.30 is still a good guidance number?  Or, we don’t have any guidance except for the line-by-line information?  

Chuck Sonsteby  - Brinker International, Inc. – EVP, CFO

I would say that the second piece would be –  

Bryan Elliott  - Raymond James – Analyst

Accurate?  Okay.  All right.  Thank you.  

Congratulations Mr. Sonsteby!  Your evasiveness of the question helped take your stock down -11% today!

Many are focused on 2-year or 3-year comp store sales run rates.  Today, most retailers reported a 2-year September 2009 comp store sales run rate (September 2008 + September 2009) that was greater than the 2-year run rate in August 2009.  But, the following retailers did not… APP, BKE, GPS, JCP, ROST, SMRT, and SSI (see tables below).   

October 2009 will be more indicative of whether the retail sector will be able to expect a continuation of improving 2-year comp store sales run rates.  Below are the 2-year comp store sales run rates for companies that reported a lower 2-year run rate in September 2009 versus August 2009:

Sanuk, the same trendy Southern California beach shoe company that gave men permission to wear their slippers to the bar (by sewing recycled tire tread to the soles), recently launched an unlikely combination for women: socks and flip-flops.  Wearing socks with flip-flops has always been a fashion faux pas, but with the return of leg-warmers and shorter skirt lengths, the rules are changing. 

TubeFlops are fun, functional, and value-conscious.  For $30 a pair, teens can buy a pair in every color!  Available at Zappos.com and Sanuk.com today, we expect retailers will be tripping over themselves to get their hands on this innovative casual shoe. 

Note:  board sport retailers including Pacific Sunwear and Zumiez typically offer Sanuk shoes although we’ve yet to see them in stores. 

Check out the sexy promo video on YouTube!

http://www.youtube.com/watch?v=_O32vGGh8Uk