Fifteen years ago it would have been safe to assume PacSun was the biggest retailer of surf, skate and mountain lifestyle apparel. The shopping mall retailer took big names Billabong and Burton and put them in shopping malls across the country. They took boardshorts and tee shirts you’d previously find in a Southern California mom and pop surf shop and made them available to middle America and everywhere in between. Essentially, PacSun made the stereotype of the Southern California beachside lifestyle a sellable commodity. Now, according to a letter released by CEO Gary H. Schoenfeld, PacSun has a restructuring plan under Chapter 11 bankruptcy.
In the letter, Schoenfeld shared that the company has made an agreement with Golden Gate Capital, a private equity firm from San Francisco. The “Plan of Reorganization” will allow them to operate business as usual, keeping all of their 593 stores across the United States open.
Schoenfeld didn’t address much else beyond his optimism for the company’s transformation, nor did he reveal details of the agreement with Golden Gate Capital. According to the Los Angeles Times, Golden Gate Capital will give PacSun at least $20 million in capital after it emerges from bankruptcy, and is converting more than 65% of its term-loan debt into equity. They are also reported to be in line for a $100 million credit line from Wells Fargo. The company’s stock has dropped drastically in the past year alone to just 10 cents per share, but studies from both the New York Times and US News suggest the difficulties have been a long time coming. And it’s not just a problem for PacSun. According to a report from Cushman & Wakefield, foot traffic in U.S. shopping malls cut in half between 2010 and 2013, from 35 billion visits to 17.3 billion visits during the holiday shopping months of November and December. Within those 12,000 malls, the New York Times said that vacancy rates have dropped over the past decade as a result. In 2006 the vacancy rate sat at 94% in 2006, then fell to 80% by 2015.
