LOS ANGELES, June 3 /PRNewswire-FirstCall/ — Sport Chalet, Inc.(Nasdaq: SPCHA, SPCHB) today announced financial results for its fourth fiscalquarter ended March 30, 2008.
Fourth Quarter Results
Sales decreased 1.1% to $96.8 million for the fourth quarter of fiscal 2008 from $97.8 million for the fourth quarter of 2007. Seven new stores not included in same store sales contributed $8.2 million in sales for the quarter while same store sales decreased 8.6%. Same store sales were negatively impacted primarily by soft macroeconomic conditions and to a lesser extent new store openings by the Company and competitors in certain markets.
Gross profit as a percent of sales was 26.3% compared to 29.3% for thefourth quarter of last year. The decline was primarily due to increased rentas a percent of sales as well as a higher level of promotional activity compared to the fourth quarter of fiscal 2007. Selling, general and administrative expenses (SG&A) as a percent of sales increased to 27.5% from24.5% last year, reflecting higher expenses as the Company’s newer stores rampup as well as reduced leverage from lower same store sales.
Net loss for the fourth quarter of 2008 was $2.8 million, or $0.20 perdiluted share, compared to a net income of $881,000, or $0.06 per diluted share, for the fourth quarter last year.
Craig Levra, Chairman and CEO, stated, ‘As we previously stated,challenges in the macroeconomic environment worsened as our fiscal year progressed, which had a greater impact on our fourth quarter results than we had anticipated. While we did experience normalized winter weather patterns during the fourth quarter, weak housing trends and rising gas prices in our core markets continued to heavily affect our customers and we were unable tofully offset these pressures on our sales. As a result, we conducted deeper promotions and aggressively managed our winter merchandise and aged inventory to help drive our top line. Despite the challenging environment, we continued to make great strides on our operational initiatives that we expect will enhance our long-term growth.’
Full Year Results
For the fiscal year, sales increased 3.7% to $402.5 million from$388.2 million for the prior year. Sales from twelve new stores not includedin same store sales contributed $32.3 million to total sales for fiscal 2008.Same store sales decreased 4.5% for the year due to the particularly weakmacro economic conditions in the majority of the Company’s markets.
Gross profit as a percent of sales was 29.0% for the fiscal year compared to 30.9% in the same period last year. The decline was due to increased rentas a percent of sales in newer stores as well as increased promotional activity in the fiscal year. SG&A as a percent of sales was 26.3% compared to24.8% in the same period of fiscal 2007, reflecting higher expenses as the Company’s newer stores ramp up as well as reduced leverage from lower same store sales.
Net loss for fiscal 2008 was $3.4 million, or $0.24 per diluted share,including a non-cash impairment charge of $2.1 million recorded in the third quarter in relation to certain California stores. Excluding the non-cash impairment charge, net loss for fiscal 2008 was $2.1 million, or $0.15 per diluted share. This compares to net income of $7.1 million, or $0.49 perdiluted share, for fiscal 2007.
Craig Levra, Chairman and CEO, concluded, ‘While our financial results were not as strong as we would have hoped, the challenging environment has allowed us to focus on enhancing our overall operations. We are very pleased with the improvements we made to our infrastructure with the launch of Enterprise Selling and SAP late in the year. These systems will support our financial and merchandising initiatives as we look to streamline costs and better serve the needs of our customers. In addition, we remain focused on offering ‘expert’ advice to our customers for a better shopping experience.Our stores are in great shape with quality merchandise and we are very pleased to have opened seven new stores this year including our first store in Utah.We will continue to make strategic investments in our business that willposition Sport Chalet for long-term success as the macro environment improves.’
Conference Call and Webcast
Sport Chalet will host a conference call and audio webcast today at2:00 p.m. (Pacific) to discuss the financial results for the fourth quarter and full fiscal year. The conference call may be accessed by dialing(706) 634-4840 and also via audio webcast at: http://www.sportchalet.com orhttp://www.earnings.com. A replay of the conference call will be available through Tuesday, June 10, 2008 by dialing (706) 645-9291 (conferenceID 48888873) and an archive of the webcast will be available for 90 days following the conclusion of the conference call.
About Sport Chalet, Inc.
Sport Chalet, founded in 1959 by Norbert Olberz, is a leading operator offull service specialty sporting goods stores in California, Nevada and Arizona. The Company offers over 50 services for the serious sports enthusiast, including backpacking, canyoneering, and kayaking instruction,custom golf club fitting and repair, snowboard and ski rental and repair,SCUBA training and certification, SCUBA boat charters, team sales, racquetstringing, and bicycle tune-up and repair throughout its 51 locations. The address for Sport Chalet’s web sites are http://www.actionpass.com andhttp://www.sportchalet.com.
Disclosure Regarding Forward-Looking Statements
Except for historical information contained herein, the statements in this release are forward-looking and made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties that may cause the Company’s actual results in future periods to differ materially from forecasted results. Those risks include, among other things, the competitive environment in the sporting goods industry in general and in the Company’s specific market areas, inflation, the challenge of implementing the Company’s expansion plans and maintaining its competitive position, changes in costs ofgoods and services, the weather and economic conditions in general and inspecific market areas. These and other risks are more fully described in the Company’s filings with the Securities and Exchange Commission.