Sport Chalet Fiscal Q2 Net Up 4.4% on 5.2% Camp Sales Gain

Sport Chalet, Inc. reported sales for the fiscal second quarter ended September 30, 2004 increased 17.2%, from $61.8 million in year-ago quarter to $72.5 million for the same quarter this year. The increase is the result of opening three new stores in late Fall 2003 and two new stores in the second quarter of this year, as well as a same store sales increase of 5.2%.

Gross profit margin increased from 29.9% for the quarter ended September 30, 2003 to 31.0% for the same quarter this year, due to reduced costs from more efficient inbound logistics as well as continued improvements in inventory procurement, which lowered markdowns as a percent of sales. Selling, general and administrative expenses, as a percentage of sales, increased from 25.2% for the three months ended September 30, 2003 to 26.8% for the same period this year, primarily due to the additional labor and advertising expense required to open three new stores, partially offset by the leverage created by the increase in same store sales.

Even with new store opening expenses, net income increased $76,000, from $1.7 million, or $0.25 per diluted share, in the second quarter last year to $1.8 million, or $0.25 per diluted share, for the same quarter this year.

For the six months ended September 30, 2004, sales increased 16.4%, from $115.1 million last year to $134.0 million for the same period this year. The increase is the result of opening three new stores in late Fall 2003 and two new stores in the second quarter of this year, as well as a same store sales increase of 5.7%. Gross profit margin increased from 28.9% for the six months ended September 30, 2003, to 30.0% for the same period this year due to reduced costs from more efficient inbound logistics as well as continued improvements in inventory procurement, which lowered markdowns as a percent of sales. Selling, general and administrative expenses, as a percentage of sales, increased from 27.2% for the six months ended September 30, 2003, to 27.4% for the same period this year as a result of the additional labor and advertising expense required to open three new stores, partially offset by the leverage created by the increase in same store sales. Consequently, net income increased $914,000 or 82%, from $1.1 million, or $0.16 per diluted share, for the six months ended September 30, 2003, to $2.0 million, or $0.28 per diluted share, for the same period this year.

Sport Chalet's expansion in Northern California continued in the second quarter of this year with the opening of stores in the cities of Roseville and Pleasanton. The Company also strengthened its primary Southern California market by adding a store location in Arcadia. In addition, the Company is scheduled to open two stores in the third quarter of fiscal 2005 in the cities of Elk Grove and Visalia. The Company currently plans to expand into Arizona with an initial opening of four locations in the Phoenix area in fiscal 2005-2006.

“Our team executed the new store openings well during the quarter without disruption to our existing store base while exceeding last year's earnings,” said Craig Levra, Sport Chalet's Chairman and Chief Executive Officer. “We continue to manage inventory effectively while achieving same store sales growth and gross profit margin improvement. I am thrilled to announce that we finished our 28th consecutive quarter with no loans outstanding. We believe that we are well positioned to continue this momentum as we expand to our third state in the upcoming year.”

                            SPORT CHALET, INC.

               CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                               (UNAUDITED)

                          Three months ended          Six months ended
                            September 30,              September 30,
                          2004         2003          2004          2003

  Net sales            $72,465,181  $61,818,702  $134,003,300  $115,127,978
  Cost of goods sold,
   buying and
   occupancy            49,989,199   43,305,377    93,828,640    81,841,640
  Gross profit          22,475,982   18,513,325    40,174,660    33,286,338
  Selling, general and
   administrative
   expenses             19,419,902   15,580,745    36,656,257    31,302,214

  Income from
   operations            3,056,080    2,932,580     3,518,403     1,984,124
  Interest expense          47,616       55,746        90,907        89,756
  Income before taxes    3,008,464    2,876,834     3,427,496     1,894,368
  Income tax provision   1,205,000    1,149,000     1,379,000       760,000

  Net income            $1,803,464   $1,727,834    $2,048,496    $1,134,368

  Earnings per share:
           Basic             $0.27        $0.26         $0.31         $0.17
           Diluted           $0.25        $0.25         $0.28         $0.16