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Sport Chalet Reports Fourth Quarter and Full Year Fiscal 2011 Results

/ Source: GlobeNewswire

    LOS ANGELES, June 2, 2011 (GLOBE NEWSWIRE) -- Sport Chalet, Inc. (Nasdaq:SPCHA) (Nasdaq: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, 2011.

    Fourth Quarter Results

    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."

    Liquidity

    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. 

    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 its store locations.

    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, including, but not limited to, the ability to strengthen the Company's liquidity, manage expenses and inventory position, improve operating efficiencies, and navigate through the current challenging environment, 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 negative effect of the economic downturn on the Company's sales, limitations on borrowing under the Company's bank credit facility, the Company's ability to reduce an adequate amount of operating expenses and control costs, the competitive environment in the sporting goods industry in general and in the Company's specific market areas, inflation, the challenge of maintaining its competitive position, changes in costs of goods and services, the weather and economic conditions in general and in specific market areas. These and other risks are more fully described in the Company's filings with the Securities and Exchange Commission.

    CONTACT: Howard Kaminsky, Chief Financial Officer (818) 949-5300 ext. 5728