Helix Investment Research
Long only, special situations, contrarian, growth

Pacific Sunwear: Finding Sunshine Amidst Teen Retail Gloom

Our examination of the teen retail sector has yielded Tilly's (NYSE:TLYS) as an attractive investment, with its Q3 earnings selloff leaving shares undervalued relative to peers. However, while Tilly's underlying performance is not necessarily poor, there is little to be truly excited about. Tilly's is certainly not growing all relevant metrics by double-digits, and the company is forecasting negative comparable sales for the crucial holiday quarter. Over the past week, a multitude of teen retailers have reported, but we believe there is one that deserves particular attention: Pacific Sunwear of California (NASDAQ:PSUN) (hereafter referred to as PacSun), which reported Q3 results on December 5. Despite rallying almost 19% on the back of solid earnings and forward...

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