Sport Chalet, Inc. reported sales decreased 1.1 % in its fourth quarter ended March 30, to $96.8 million from $97.8 million a year ago. The net loss for the fourth quarter was $2.8 million, or 20 cents a share, compared to a net income of $881,000, or 6 cents, a year ago. In early April, Sports Chalet warned that it would record a net loss in the range of 20 cents to 25 cents per due to “challenging sales environment.”
Gross profit as a percent of sales was 26.3% compared to 29.3% for the fourth quarter of last year. The decline was primarily due to increased rent as 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% from 24.5% last year, reflecting higher expenses as the company's newer stores ramp up as well as reduced leverage from lower same store sales.
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 to fully 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 included in 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 weak macro 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 rent as 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 to 24.8% 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 per diluted share, for fiscal 2007.
Levra 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 will position Sport Chalet for long-term success as the macro environment improves.”
