Sports Chalet reviewing strategic alternatives

More news on the retail front as another industry customer announces it is reviewing its financial options.

Sports Chalet, which operates 55 stores in California, Utah, Nevada and Arizona, said it has launched an evaluation of its “strategic alternatives.” Usually, when companies use the “strategic alternatives” term, it’s code word for “the company is struggling and something needs to change.”

In a press release, Sports Chalet said the review could include “such alternatives as raising additional capital, amending or replacing the Company’s current bank credit facility, further reducing expenses, or continuing to execute the Company’s current operating plan.”

Sports Chalet is a major snow account for many action sports retailers. 

Same-store sales fell 6.7 percent at Sports Chalet in the quarter ended Sept. 28. Total sales decreased 1.2 percent to $96.5 million. The company recorded a net loss of  $4.2 million compared to net income of $739,000 in the same quarter last year. 

Here is the full release:

Sport Chalet Announces Review of Strategic Alternatives

Monday February 2, 4:00 pm ET

LOS ANGELES, Feb. 2, 2009 (GLOBE NEWSWIRE) — Sport Chalet, Inc. (NasdaqGM:SPCHA – News) (NasdaqGM:SPCHB – News) today announced that its Board of Directors is engaged in an evaluation of strategic alternatives. The Board has retained Wedbush Morgan Securities as its financial advisor in this process.

Craig Levra, Chairman and CEO, said, “While we remain focused on meeting the challenges posed by the unprecedented macroeconomic difficulties in our core market areas of California, Nevada and Arizona, the Board is evaluating all alternatives to achieve maximum value for Sport Chalet shareholders.’

The review process may include such alternatives as raising additional capital, amending or replacing the Company’s current bank credit facility, further reducing expenses, or continuing to execute the Company’s current operating plan. No timetable has been set for completion of the review. The Company has no commitment or agreement with respect to any transaction, and there can be no assurance that any transaction will result. The Company does not plan to make any further comment on the review until the review is complete.

The Company also announced today that on January 29, 2009, Sport Chalet, Inc. and its wholly-owned subsidiary, Sport Chalet Value Services, LLC, entered into a Second Amendment to Amended and Restated Loan and Security Agreement and Limited Forbearance Agreement, with Bank of America, N.A. Under the Second Amendment, Bank of America, N.A. has agreed to extend the period during which it will forbear from exercising its rights with respect to certain defaults by the Company under its credit facility from January 31, 2009 until March 2, 2009.

The Company will release third quarter fiscal 2009 earnings results after the market closes on Wednesday, February 11, 2009.

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