Sport Chalet Fiscal Q3 Comps Up 6.8%; Net Up 23%

Sport Chalet, Inc. reported that sales for its fiscal third quarter ended December 31 increased 20.3% to $95.9 million from $79.7 million for the year-ago quarter. The increase is the result of opening eight new stores, as well as a 6.8% same-store sales increase.

Gross profit margin decreased slightly from 32.6% for the quarter ended December 31, 2003 to 32.5% for the same quarter this year. Selling, general and administrative expenses, as a percentage of sales, decreased from 26.1% for the three months ended December 31, 2003 to 25.7% for the same period this year, as a result of the efficiencies created by the increase in same store sales and reduced workers compensation expense partially offset by the costs associated with new stores.

Net income increased 23.2% to $3.8 million, or 53 cents per diluted share, from $3.1 million, or 44 cents per diluted share, in the third quarter last year.

For the nine months ended December 31, 2004, sales increased 18.0%, from $194.8 million last year to $229.9 million for the same period this year. The increase is the result of opening eight new stores as well as a same store sales increase of 6.1%.

Gross profit margin increased from 30.4% for the nine months ended December 31, 2003, to 31.0% for the same period this year due to reduced costs from more efficient inbound logistics as well as continued improvements in inventory procurement. Selling, general and administrative expenses, as a percentage of sales, remain unchanged at 26.7% for the nine months ended December 31, 2003 and the same period this year, as a result of the efficiencies created by the increase in same store sales and reduced workers compensation expense offset by the costs associated with new stores.

Net income increased $1.6 million, or 38.6%, from $4.2 million, or $0.61 per diluted share, for the nine months ended December 31, 2003, to $5.8 million, or $0.81 per diluted share, for the same period this year.

Sport Chalet’s expansion in Northern California continued in the third quarter of this year with the opening of its Elk Grove store. The Company also opened its first Central California location with a store in the city of Visalia and strengthened its primary Southern California market by adding a store location in Arcadia.

“I am proud of our entire team who rose to the challenge of opening new stores during a successful holiday season, while achieving the most profitable quarter in the Company’s history,” said Craig Levra, Sport Chalet’s Chairman and Chief Executive Officer. “We believe that the investment in opening new stores will be returned in improved company profitability as the stores mature. In addition, we expect to continue to execute our expansion plan by focusing on Arizona this year with three stores located in Phoenix, Chandler and Scottsdale.”

                              SPORT CHALET, INC.

                 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                 (UNAUDITED)

                           Three months ended          Nine months ended
                              December 31,                December 31,
                            2004        2003           2004          2003

     Net sales          $95,913,947  $79,704,678  $229,917,247  $194,832,656
     Cost of goods
      sold, buying
      and occupancy      64,743,377   53,743,477   158,572,017   135,585,117
     Gross profit        31,170,570   25,961,201    71,345,230    59,247,539
     Selling, general
      and administrative
      expenses           24,697,260   20,807,415    61,353,517    52,109,629

     Income from
      operations          6,473,310    5,153,786     9,991,713     7,137,910
     Interest expense       145,842       72,314       236,749       162,070
     Income before taxes  6,327,468    5,081,472     9,754,964     6,975,840
     Income tax
      provision           2,529,000    1,997,000     3,908,000     2,757,000

     Net income          $3,798,468   $3,084,472    $5,846,964    $4,218,840

     Earnings per share:
       Basic                  $0.57        $0.46         $0.88         $0.64
       Diluted                $0.53        $0.44         $0.81         $0.61