Surf shops, seeking next wave of growth, discover girls.

Ask Greg Weaver what's driving the heady growth of Pacific Sunwear of California Inc., and he points to a wall in the retailer's Fashion Island store that's neatly arranged with sweatshirts, T-shirts and low-rise jeans.

"Girls," he said. "They are driving our business to new levels."

Along with a host of local surf-wear makers, Anaheim-based PacSun is riding one of the biggest things to happen to the action sports market in a while: girl shoppers. And lots of them.

This year, girls' apparel is one of the key reasons "literally every measurable (aspect) of the company is heading north," said Weaver, who is chief executive.

That includes PacSun's stock, which is up about 40 percent for the year.

The irony, Weaver said, is that there are more competitors than ever in the teen space. They include Industry-based Hot Topic Inc., Foothill Ranch-based Wet Seal Inc. and New Albany, Ohio-based Abercrombie & Fitch Co.

PacSun's sales for the second quarter rose about 23 percent, to $234 million, while same-store sales jumped 13.9 percent, at a time when most retailers are hurting.

Weaver joined PacSun in 1987 when there were only about a dozen stores. At the time, an investment group just had bought out the two founders--suffers who ran a cluster of stores in Southern California selling mostly wet suits and surfboards.

"Wall Street thought, 'Oh, this is a good little company. Maybe it'll go to Florida or Hawaii," Weaver said. "The irony is we've opened stores in Vermont and Alaska. We don't have a bad state. These brands and these looks have become mainstream."

PacSun has stores in 49 states and Puerto Rico, the bulk of which (725) fall under the PacSun brand. The balance (114) are d.e.m.o, stores, the company's urban chain.

By 2007, PacSun hopes to have up to 1,400 stores. By next summer, it expects to open 86 new stores--65 PacSuns, seven PacSun outlets and 14 d.e.m.o, stores.

PacSun launched d.e.m.o, in 1998 to tap into hip-hop apparel--the only real threat to surfwear's dominance among teens.

D.e.m.o., which sells brands such as Phat Farm, Sean John and Shady Ltd., hasn't cannibalized PacSun sales, Weaver said. "You can put a d.e.m.o, store next to PacSun store, and we have in 22 states, and there's no crossover," he said.

A big part of nailing trends is having the the right product at the right price, Weaver said. "I'm a focus group junkie," he said. "I do as much research as I can."

Weaver and other executives travel the country visiting stores and doing research. He said they solicit teens shopping in stores, give them cards or dinner and ask them questions about brands, fashion and prices for 90 minutes.

PacSun also holds teen panels and shows them new looks from its private label brands. Besides Tilt for girls, the company offers Bullhead and Kirra for guys.

PacSun deals with a highly fickle and volatile segment. But unlike rivals like Wet Seal that depend largely on private label offerings, PacSun rides on the coattails of hip brands, such as Hurley, Fox Racing and Roxy.

"These kids bore very easily," Weaver said. "They don't stay loyal to one brand."

The retail game is a constant challenge.

In 2001, PacSun' same-store sales slipped for the first time in years, as it struggled to raise its slumping business selling men's shorts and pants. It also was fighting a bad retail year and dealing with workforce issues stemming from its expansion.

During its rapid expansion, the company hired 5,000 to 6,000 people in five years, many of whom didn't have good training, Weaver said. As a result, PacSun temporarily slowed its new store plans and retrenched.

"I knew I had to do a lot of things differently if I wanted to stay in the job," Weaver said. "I'm very driven by success. I'm petrified of failure."

Weaver said he hired a human resources expert who told him to bolster training and do better hiring. "Not everyone rose to the occasion. They're no longer with us," he said.

PacSun also is cautious about the size of its store leases. Weaver said he still personally signs every lease. If you start leasing big stores, "that is the kiss of death," he said. "If we make bad apparel decisions we mark it down and move on," he said. "Your real estate mistakes can take your company down."