Sport Chalet Continues Expansion; Will Enter Utah

Sport Chalet Inc. was able to report a solid fiscal third quarter with sales, comps, and income all increasing in spite of weak snowfall in most of the western states where the chain is located. The company opened nine new locations since the third quarter last year, which contributed $12.1 million to overall sales. The 3.8% increase in comparable store sales was largely due to strong sales of winter related products. Management said that the lack of snowfall was offset by colder than normal temperatures in the California market. In addition to winter products, footwear, general athletics, fishing, watches, sport watches, and sport electronics sold well.

Margins were up for the quarter ended December 31 primarily because of leverage created by increased same store sales against relatively fixed occupancy costs. SG&A as a percentage of sales remained relatively flat during the quarter in spite of higher sales. The leverage created by increased sales was offset by the expenses associated with new stores which take time to reach operating efficiency.

Sport Chalet remains on track in its plans to complete implementation of the SAP system in the second half of this calendar year. In addition, Sport Chalet’s newly implemented “Action Pass” has been showing some positive results. The company said that the ability to watch their best customers’ spending patterns is helping them to better anticipate upcoming trends and stay ahead of the curve with regard to customer demands. The company should have the remainder of it stores on-line with Action Pass programs this year. In addition, the program has been boosting average ticket prices for Action Pass holders.

Sport Chalet’s plan for calendar 2007 is to open six to eight new stores and complete two major remodels during the year. The new stores will primarily be focused on adding density to existing markets in Arizona, Southern California, and Nevada with the majority in Arizona. The company will be entering one new market during the 2007 calendar year, Utah. The new store will be located in Jordan Landing, which is in the greater Salt Lake City area.