– Sales flat at $88.8 million
– Same store sales fall 1.9%
– Gross profit improves slightly to 28.2% vs. 28%
– Net loss of $518,000 vs. $1.2 million same period last year
Press Release:
LOS ANGELES, Nov. 10, 2010 (GLOBE NEWSWIRE) — Sport Chalet, Inc. (Nasdaq:SPCHA – News) (Nasdaq:SPCHB – News) today announced financial results for its second fiscal quarter and six months ended September 26, 2010.
Second Quarter Results
Sales totaled $88.8 million for the second quarter of fiscal 2011, approximately the same as that of the prior year period, reflecting improvements in the Company’s Team Sales and ECommerce divisions, partially offset by a 1.9% decrease in comparable store sales.
Gross profit as a percent of sales increased slightly to 28.2% from 28.0% for the second quarter of last year, primarily due to lower rent expense from successful negotiations with landlords, partially offset by an increase in markdowns from promotional activity. Selling, general and administrative expenses (SG&A) as a percent of sales increased to 25.2% from 24.8% in the same period last year, primarily reflecting an increase in labor for store payroll and training to support the Company’s initiative on having the best trained experts in merchandise and specialty services. Depreciation declined as a percent of sales to 2.9% from 3.7%, primarily due to impairment charges incurred in the previous two fiscal years, as well as lower capital expenditures with no new store openings or remodels.
The Company’s net loss for the quarter ended September 26, 2010 was reduced by $694,000 to $518,000, or $0.04 per share, from a net loss of $1.2 million, or $0.09 per share, for the quarter ended September 27, 2009.
Craig Levra, Chairman and CEO, said, “Results for the second quarter demonstrated the benefits of the initiatives implemented throughout the Company over recent periods and enabled us to reduce our net loss and achieve positive operating income. We continue to strengthen the Company’s liquidity by managing expenses and focusing on our inventory position, which, in turn, will further improve operating efficiencies. Our recently signed, new credit facility with Bank of America represented a vote of confidence in the Company’s future by one of the nation’s leading financial institutions and provides us with tremendous flexibility to support our strategic initiatives and to further enhance our vendor relationships.
“Our entire team remains focused on actions that will continue to improve our business, support our strategy for the long term and help us navigate through the current challenging economic environment,” Levra added.
Six-Month Results
For the six months ended September 26, 2010, sales rose to $168.5 million from $168.2 million for the first half of the prior fiscal year. The slight increase is attributable primarily to improvements in the Team Sales and ECommerce divisions, partially offset by a 1.5% decrease in comparable store sales. Continued macroeconomic weakness in the Company’s markets provided no catalysts for a sales increase despite the Company’s promotional events and initiatives to improve sales.
Gross profit as a percent of sales increased to 28.2% from 27.2% for the first six months of last year. SG&A as a percent of sales increased to 25.8% from 25.0% a year ago. Depreciation as a percent of sales declined to 3.1% from 4.0%.
The Company’s net loss for the six months ended September 26, 2010 was reduced by $1.7 million to $2.5 million, or $0.17 per share, from a net loss of $4.2 million, or $0.30 per share, for the six months ended September 27, 2009.
Liquidity
As a result of the Company’s focus on improving inventory productivity, inventory decreased $3.6 million in the 26 weeks ended September 26, 2010 from the higher than planned inventory levels at the end of fiscal 2010. As previously reported, Sport Chalet signed a new four-year $65 million credit agreement with Bank of America in October 2010, replacing its previous credit facility. The new credit facility allows the Company to borrow on more favorable terms and conditions with an increase in availability, a reduction in interest rates, revised financial covenants and an extended expiration date to October 2014.
About Sport Chalet, Inc.
Sport Chalet, founded in 1959 by Norbert Olberz, is a leading, full service specialty retailer with 55 stores in California, Nevada, Arizona and Utah; Sport Chalet online at sportchalet.com; and a Team Sales division. The Company offers more than 50 services for the serious sports enthusiast, including backpacking, canyoneering and kayaking instruction, car rack installation, snowboard and ski rental and repair, SCUBA training and certification, SCUBA boat charters, team sales, racquet stringing, and bicycle tune-up and repair at each of its store locations.
