Sport Chalet, Inc. reported that its fiscal fourth quarter sales and earnings continued to be adversely impacted by a challenging sales environment due largely to weak macroeconomic trends in the company's key markets. As a result of those trends, the company expects fourth quarter net sales to decrease slightly to $97.0 million from $97.8 million for the same period last year. Comparable store sales for the fourth quarter are expected to decline approximately 9.0% from the same period a year ago. In addition, the company expects to record a net loss for the quarter in the range of 20 cents to 25 cents per diluted share after net income of 6 cents per diluted share last year.
For fiscal 2008, the company now expects to report a 3.8% increase in net sales to approximately $403.0 million from $388.2 million for the same period last year. Comparable sales for the full year are expected to decline approximately 5.0% from the same period a year ago. The company had guided to a comps decline in the range of 2% to 4% at the end of the fiscal third quarter. Sport Chalet anticipates a fiscal 2008 loss per diluted share in the range of 24 cents to 29 cents. Excluding an impairment charge which was recorded in the third quarter, Sport Chalet anticipates a fiscal 2008 loss per diluted share in the range of 15 cents to 20 cents compared to earnings per diluted share of 50 cents in the prior year.
“Challenges in the macroeconomic environment worsened as our fiscal year progressed which had a greater impact on our results in the fourth quarter than we had anticipated,” Craig Levra, chairman and CEO of Sport Chalet, stated. “Housing trends in California, Arizona and Nevada are currently some of the weakest in the U.S. and we believe this has placed additional pressure on our customers. Although we had expected pressure on our comparable store sales growth for the year due to the retail environment, our backfilling strategy and competition entering our markets, the significantly slower than expected consumer trends we experienced further softened sales for the fourth quarter and the year. As a result, we conducted deeper promotions to help drive our top line as well as more aggressively manage our winter merchandise and aged inventory to ensure we entered the new fiscal year with an appropriate inventory position.
“Recognizing the difficult operating environment, we are taking a defensive posture for the short-term while we also continue to focus on executing key initiatives that will support our long-term growth. We are pleased to have recently launched SAP, which we expect will create greater efficiencies and more integrated operations for our business. With the improvements we have already made to our infrastructure and systems, we were also able to close our outlet store as planned. Looking ahead, we currently expect the challenging retail trends to continue into fiscal 2009. We will continue to prudently manage our business and we expect to realize the benefits of our efforts when broader economic trends improve.”
