focused on reducing inventory levels, managing costs and preserving our liquidity in this challenging retail environment," commented Sally Frame Kasaks, Chief Executive Officer. "We expect the retail industry will continue to face significant challenges in 2009, but we believe that we have taken appropriate and decisive steps to help us improve profitability in the long term."

2008 Accomplishments
During fiscal 2008, the Company accomplished several strategic and business objectives, including the following:
• Closed the Company's underperforming demo business, thereby allowing the Company to focus solely on its core PacSun concept;
• Exited the Company's underperforming and lowest margin sneaker category to focus its merchandising efforts on its higher margin, faster turning apparel business;
• Consolidated to a single distribution center to lower costs, enhance efficiency and improve time to market within the Company's supply chain;
• Implemented a series of actions to better position the Company in the current economic environment, including significantly reducing inventory levels and planned capital expenditures and SG&A expenses for fiscal 2009;
• Exceeded the Company's goal for fiscal 2008 of apparel representing at least 80% of its merchandise mix, with its Juniors' business accounting for 50% of its apparel assortment;
• Established a $150 million, asset-backed credit facility with JP Morgan and Bank of America as its primary lenders; and
• Ended fiscal 2008 with nearly $25 million in cash on the balance sheet and no direct borrowings under the Company's credit facility.

Full Year Results
Total sales for fiscal 2008 (52 weeks) ended January 31, 2009 were $1,254.9 million, a decrease of 3.9 percent from total sales of $1,306.0 million during fiscal 2007 (52 weeks) ended February 2, 2008. Total Company same-store sales decreased 5 percent during fiscal 2008.

For fiscal 2008, the Company recorded a loss from continuing operations of $39.4 million, or $(0.59) per diluted share, compared to income from continuing operations of $45.6 million, or $0.65 per diluted share, in fiscal 2007.

Results for fiscal 2008 include the previously announced non-cash, pre-tax asset impairment charge of $8.0 million, or $0.07 per diluted share, incurred in the first quarter related to the materials handling equipment in the Company's closed Anaheim distribution center, the non-cash, pre-tax goodwill impairment charge of $6.5 million, or $0.06 per diluted share, incurred in the third quarter, the pre-tax gain on the sale of the Company's closed Anaheim distribution center of $8.7 million, or $0.09 per diluted share, and a pre-tax, non-cash impairment charge of $4.6 million, or $0.05 per diluted share, associated with a reduction in the fair value of certain land that was held by the Company for sale during the fourth quarter.

Financial Outlook for First Fiscal Quarter of 2009
As previously announced, the Company is now providing earnings guidance only on a quarter-to-quarter basis due to the unprecedented and uncertain nature of the current economic and consumer environment. Assuming a same-store sales decline in the negative low-twenty percent range for the first quarter, the Company expects to report a loss of $(0.26) to $(0.31) per diluted share for the first quarter of fiscal 2009.
 
Pacific Sunwear of California Inc