PacSun made one mistake that ruined its business


Pacific Sunwear was once very popular and a staple for teens at the mall.

But now, the company might be struggling to survive.

The formerly popular teen mall staple, which just prepared to file for bankruptcy, has reported only financial losses since 2008, and its shares have been plummeting this year.

The Wall Street Journal had noted that the company has roughly $160 million in debt, and had hired FTI Consulting Inc. and Guggenheim Securities to help it dig out of the hole. 

Then, the company officially filed for bankruptcy, announcing the news in a release. Brand President and CEO Gary R. Schoenfeld said that he “[wanted] to emphasise that our customers should not be affected by this restructuring process.”

But Pacific Sunwear has made one major mistake that led to its downfall — selling similar stuff to everyone else.

“It’s extremely unfortunate, because you could walk by a PacSun store right now and look inside and think, ‘wow! This looks great!’…and scratch your head and not understand what went wrong,” Gabriella Santaniello, analyst and founder of A-Line Partners, said to Business Insider. “I think that they have just been unfortunately a victim of fast fashion.”

Other retailers are selling the same looks, she said. (And even a cursory look around the mall shows an abundance of the laid back, California, festival-esque style, too.)

“The California lifestyle look [is] exploding on the scene and everybody [is] trying to get in on the action,a dn you look now at a Hollister, Abercrombie … American Eagle, and everybody is carrying the same look,” she said, pointing to how teen retail used to have a more “preppy” look to it.

That’s not to say that PacSun didn’t try. Santaniello points to the Kendall and Kylie Jenner line and the smart move to get exclusive rights to sell hot teen retailer’s Brandy Melville’s apparel. 

But malls are already struggling, and consumers don’t want to pay full price for apparel unless they absolutely have to. Fast fashion retailers like Zara have been schooling traditional retailers in how to churn out the looks that consumers see on Instagram at competitive prices — and, in Zara’s cases, with low inventories and huge profits.

PacSun was selling a look that wasn’t distinct and therefore had to compete with everybody else. In the end, consumers didn’t find it compelling.

The company also had to compete with fast fashion’s price points, which at times, can resemble those of bargain bins.

“It’s just a look that [makes it] just hard to compete because it’s not necessarily branded, and so when it’s not branded and people aren’t looking for logo, that’s where you compete on price and … they just couldn’t compete on price,” Santaniello said. 

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