Sport Chalet, Inc.'s sales were flat in the fiscal second quarter ended Sept. 26, at $88.8 million. Gains in the West Coast retailer's team business and e-commerce divisions offset a 1.9% slide in same-store sales. The net loss was cut to $518,000, or 4 cents a share, from $1.2 million, or 9 cents, in fiscal Q2 last year.
Gross margin improved slightly to 28.2% of sales from 28.0% of sales in the year-ago quarter as lower rent expense from landlord renegotiations offset increased markdowns. SG&A increased to 25.2% of sales from 24.8% of sales in fiscal Q2 last year, reflecting an increase in labor for store payroll and higher training costs at the store level. Depreciation declined to 2.9% of sales from 3.7% due to impairment charges incurred in the previous two fiscal years, as well as lower capital expenditures with no new store openings or remodels.
Operating earnings of $131,000 in the latest quarter compared with a $509,000 operating loss a year ago. Inventory dipped 0.3% to $93.7 million as of Sept. 28 versus the fiscal second quarter-end last year.
“Results for the second quarter demonstrated the benefits of the initiatives implemented throughout the company over recent periods and enabled us to reduce our net loss and achieve positive operating income,” said Craig Levra, chairman and CEO, in a statement. “We continue to strengthen the company's liquidity by managing expenses and focusing on our inventory position, which, in turn, will further improve operating efficiencies.”
He further noted that Sport Chalet's recently signed, new credit facility with Bank of America “represented a vote of confidence in the company's future by one of the nation's leading financial institutions and provides us with tremendous flexibility to support our strategic initiatives and to further enhance our vendor relationships.”
As reported, the four-year $65 million credit agreement signed in October 2010 features more favorable borrowing terms and conditions with increased availability, reduced interest rates, revised financial covenants and an extended expiration date to October 2014.
