Sport Chalet Sees Big Q2 Sales and Income Gains

Sport Chalet, Inc. announced that for its fiscal first quarter ended June 30, 2005, sales increased 17.2% to $72.1 million from $61.5 million last year. The increase is the result of opening five new stores as well as a same store sales increase of 4.9%. The same store sales increase is primarily due to strong performance in the footwear category compared to the same quarter last year.

Gross margin increased from 28.9% for the quarter ended June 30, 2004 to 29.5% for the same quarter this year, primarily due to the increase in same store sales which reduced the need for markdowns. Selling, general and administrative expenses, as a percentage of sales, increased slightly from 28.4% for the three months ended June 30, 2004 to 28.6% for the same period this year. This is primarily a result of increased litigation reserves and infrastructure consulting fees, partially offset by the efficiencies from the increase in same store sales and a gain from an insurance reimbursement for a store damaged in 2004. Net income increased $252,000, or 183.9% from $137,000, or 2 cents per diluted share for the quarter ended June 30, 2004, to $389,000, or 6 cents per diluted share for the same quarter this year.

Commenting on the results, Craig Levra, chairman and CEO, said, “We are extremely pleased to sustain the momentum from fiscal 2005 to a strong first quarter in fiscal 2006. We continue to benefit from the strategic initiatives we put in place in the past few years, as reflected in our financial performance as gross margin improved 60 basis points. As we move forward, we will remain focused on continuing to enhance our operating platform and believe we are well positioned to maintain our performance in the second quarter of fiscal 2006.”

                          SPORT CHALET, INC.

                 CONDENSED CONSOLIDATED STATEMENTS OF INCOME

                                                    Three months ended
                                                        June 30,
                                                  2005              2004

    Net sales                                  $72,192,395       $61,621,119
    Cost of goods sold, buying and
          occupancy costs                       50,888,759        43,852,789
    Gross profit                                21,303,636        17,768,330

    Selling, general and administrative
          expenses                              20,648,405        17,486,345
    Income from operations                         655,231           281,985

    Interest expense                                (1,887)          (43,291)
    Income before taxes                            653,344           238,694

    Income tax provision                           264,000           101,865
    Net income                                    $389,344          $136,829

    Earnings per share:
                 Basic                               $0.06             $0.02
                 Diluted                             $0.06             $0.02