Sport Chalet Expects Q3 Loss on Comps Decline…

Sport Chalet, Inc. announced that it expects sales to rise only 1.1% for the fiscal third quarter to $116.0 million from $114.7 million in the year-ago quarter.  Comparable store sales for the quarter are expected to decline approximately 7.0% after increasing 3.8% in the year-ago period.

Including a non-cash impairment charge of approximately $2.1 million, or 9 cents per diluted share, which the company now expects to record in relation to certain California stores, Sport Chalet anticipates reporting a loss per diluted share in the range of 6 cents to 9 cents for the third quarter, compared to earnings per diluted share of 28 cents in the prior year's third quarter.  Excluding the non-cash impairment charge, the company anticipates that it will report earnings per diluted share in the range of breakeven to 3 cents.

Management currently expects full fiscal year net sales will increase moderately over fiscal 2007, while comparable store sales are expected to decline approximately 2% to 4%.

Net income is expected to be lower than last year as sales growth from the seven new stores opened this fiscal year plus the five new stores opened last fiscal year are offset by their costs, due to new stores taking time to reach operating efficiency and the lack of leverage generated from mature stores due to anticipated lower sales.

Craig Levra, chairman and CEO of Sport Chalet, stated, “Early in the quarter, traffic in our stores in Southern California was negatively impacted by the area's wildfires. As the quarter progressed, we also saw slower than anticipated sales due to warm weather and a later start to the winter season…”

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Thomas J. Ryan

Thomas J. Ryan Senior Business Editor | SGB Media tryan@sgbonline.com | 917.375.4699

Sport Chalet Expects Q3 Loss on Comps Decline

Sport Chalet, Inc. announced that it expects sales to rise only 1.1% for the fiscal third quarter ended Dec. 30 to $116.0 million from $114.7 million in the year-ago quarter. Comparable store sales for the third quarter are expected to decline approximately 7.0% from the same period a year ago.


During the third quarter the company reports its sales and earnings were impacted by a challenging sales environment due largely to weak macroeconomic trends in the company's markets, especially in its core Southern California market.

 

Including a non-cash impairment charge of approximately $2.1 million pre-tax, or 9 cents per diluted share, which the company now expects to record in relation to certain California stores, Sport Chalet anticipates reporting a loss per diluted share in the range of 6 cents to 9 cents for the third quarter, compared to earnings per diluted share of 28 cents in the prior year's third quarter. Excluding the non-cash impairment charge, the company anticipates that it will report earnings per diluted share in the range of breakeven to 3 cents.

Based on recent macroeconomic and company trends, management is updating expectations for full fiscal year results. While Sport Chalet experienced a dry winter which impacted results in last year's fourth fiscal quarter, the company has not experienced a higher level of customer demand for winter products to date in this year's fourth fiscal quarter.


Management currently expects full fiscal year net sales will increase moderately over fiscal 2007 while comparable store sales are expected to decline approximately 2% to 4%. Net income is expected to be lower than last year as sales growth from the seven new stores opened this fiscal year plus the five new stores opened last fiscal year are offset by their costs, due to new stores taking time to reach operating efficiency and the lack of leverage generated from mature stores due to anticipated lower sales.

Craig Levra, Chairman and CEO of Sport Chalet, stated, “A number of factors contributed to Sport Chalet experiencing a very challenging retail environment across our markets throughout the third quarter, particularly in Southern California. Early in the quarter, traffic in our stores in Southern California was negatively impacted by the area's wildfires. As the quarter progressed, we also saw slower than anticipated sales due to warm weather and a later start to the winter season than we've historically experienced coupled with weak consumer demand resulting from the severe housing market downturn. Despite the external environment, we continue to properly position our merchandise assortment and in-store experience to be a market leader in specialty sports. As broader consumer trends improve, we anticipate that the infrastructure and technology enhancements we have been implementing over the past several years as well as our targeted store expansion will place Sport Chalet in a strong position for future sales and earnings growth.”

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Teresa Hartford

Teresa Hartford Group Publisher & Creative Director | SGB Media teresa@sgbonline.com | 704.651.5741

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