Sport Chalet announced its first quarterly profit in 13 quarters yesterday. Net income for its fiscal fourth quarter ended April 3, 2011 was $300,000, or 2 cents a share, compared with a loss of $300,000 in 2010. Quarterly sales climbed 8.8 percent to $98.2 million from $90.2 million a year ago.
The company attributed the growth to the extra week in the four quarter of 2011.
For the full year, net loss for fiscal 2011 was reduced to $3.0 million, or $0.21 per diluted share, compared to a net loss of $8.3 million, or $0.59 per diluted share for fiscal 2010.
- – Achieved first profitable quarter in the prior 13 quarters
- – Reduced full year net loss by 64% to $3.0 million
- – Lowered bank loan balance by 10% or $4.4 million
- – Grew online sales by 110% for the year
Los Angeles, California – (June 2, 2011) – Sport Chalet, Inc. (Nasdaq: SPCHA, SPCHB) today
announced financial results for its fourth quarter and full year ended April 3, 2011. Fiscal 2011
is a 53 week year and thus includes one extra week in the fourth quarter and ends on April 3,
Sales increased 8.8% to $98.2 million for the fourth quarter of fiscal 2011 from $90.2 million for
the fourth quarter of fiscal 2010, primarily due to the extra week in the fourth quarter of fiscal
2011 which contributed $5.9 million to sales. Sales increased 2.4%, excluding the extra week in
the fourth quarter of fiscal year 2011, due to a comparable store sales increase of 1.3% on top of
an increase of 5.7% for the fourth quarter of last year, and online and Team Sales divisions sales
increases of 60% and 24%, respectively.
Gross profit as a percent of sales increased to 29.0% from 27.7% for the fourth quarter of last
year primarily due to lower rent expense. Selling, general and administrative expenses (SG&A)
as a percent of sales increased to 25.4% from 24.3% in the same period last year, primarily
reflecting increases in labor and workers compensation expense. The increase in labor for store
staff helped drive the improvement in comparable store sales.
The Company's net income for the quarter ended April 3, 2011 increased by $0.6 million to $0.3
million, or $0.02 per share, from a net loss of $0.3 million, or $0.02 per share, for the quarter
ended March 28, 2010.
Craig Levra, Chairman and CEO, said, "The fourth quarter marked our first profitable quarter in
the prior 13 quarters. We were able to continue the growth of our Team Sales and online
divisions, increase our comparable store sales and more importantly, return to profitability. We
are pleased that comparable store sales maintained the stability in recent quarters compared to
the significant decreases in fiscal 2009 and fiscal 2010."
Full Year Results
For the fiscal year, sales increased 2.5% to $362.5 million from $353.7 million for fiscal 2010,
primarily due to the extra week in the fourth quarter of fiscal 2011 which contributed $5.9
million to sales. Sales increased 0.8%, excluding the extra week in fiscal year 2011, due to
online and Team Sales divisions sales increases of 110% and 15%, respectively, partially offset
by a comparable store sales decrease of 0.4%. Continued weak macroeconomic conditions in our
markets caused the slight decline in comparable store sales.
Gross profit as a percent of sales increased to 28.2% from 26.8% for fiscal 2010 primarily due to
lower rent expense. SG&A as a percent of sales increased to 25.6% from 24.3% for fiscal 2010,
primarily from increased labor, which helped increase the average sales transaction by 2.0%.
Depreciation as a percent of sales declined to 2.9% from 3.6% as a result of the non-cash
impairment charge of $10.9 million recorded in fiscal 2010 and the low level of capital
expenditures in fiscal 2010 and fiscal 2011 with no new store openings or remodels. The
Company recorded an income tax benefit from a change to the net operating carryback
regulations in fiscal 2010, while no provision was recorded in fiscal 2011.
Net loss for fiscal 2011 was reduced to $3.0 million, or $0.21 per diluted share, compared to a
net loss of $8.3 million, or $0.59 per diluted share for fiscal 2010. Excluding the non-cash
impairment charges and the effect of income taxes in fiscal years 2011 and 2010, the Company's
net loss was reduced to $3.0 million, or $0.21 per diluted share for fiscal 2011, from a net loss of
$6.5 million, or $0.46 per diluted share for fiscal 2010.
Craig Levra, Chairman and CEO, concluded, "During the year, we increased our store staff and
customer service to allow our sales associates to focus on our expanding assortment of specialty
brands, which resulted in a higher average sales transaction."
"For fiscal 2012, we continue to micro-merchandise utilizing Action Pass data, improve the
functionality of sportchalet.com, and refine our store strategy. These steps combined with our
improving operating performance position us for future growth. Our company continues to
evolve and adapt, is markedly better and we are excited about our future."
During fiscal 2011, Sport Chalet signed an expanded credit agreement with Bank of America
that allows the Company to borrow on more favorable terms and conditions. On April 3, 2011,
the credit facility had a borrowing capacity of $65.0 million, of which the Company utilized
$42.5 million (including a letter of credit of $1.6 million) and had $16.0 million in availability,
$10.2 million above the EBITDA covenant availability requirement of $5.8 million. With the
expanded credit facility in place, the increased availability provides the Company with the
financial flexibility to pursue its operating and strategic initiatives.