Sport Chalet Fiscal Q3 Net Income Jumps 18.2%

Sport Chalet, Inc. announced sales for the fiscal third quarter ended December 31, 2002 have increased from $67.4 million for the three months ended December 31, 2001 to $72.3 million for the same period this year, a 7.2% increase. The increase is the result of opening two new stores in late November 2002, aided by a comparable store sales increase of 2.2%. Net income increased 18.2% from $2.2 million, or $0.31 per diluted share, for the three months ended December 31, 2001 to $2.6 million, or $0.38 per diluted share, for the same period this year, primarily as a result of increased gross profit resulting from better inventory management.

During the nine months ended December 31, 2002, sales increased from $170.0 million for the same period last year to $179.8 million, a 5.7% increase. The increase is the result of opening two stores in the period last year and two new stores in November 2002. Comparable store sales remained flat compared to the same period last year, as the results from the all important holiday selling period reflected a positive change from the negative comparable store sales experienced in the first half of the fiscal year. Net income decreased from $4.8 million, or $0.68 per diluted share, for the nine months ended December 31, 2001 to $4.1 million, or $0.59 per diluted share, for the same period this year, primarily as a result of increased selling, general and administrative expenses. Increases in Southern California utility expense combined with professional fees and incentive based labor, as a percent of sales, were the primary factors causing the change in selling, general and administrative expenses.

Commenting on the results, Craig Levra, Chairman and CEO, said, “In an environment of prolonged economic recovery we are satisfied with our third quarter performance. While other retailers have commented on the lackluster sales in the all important holiday shopping season, we are pleased that this quarter’s comp sales increase reflects a positive change compared to the first half of the fiscal year.” Mr. Levra added, “Our continued focus on improving inventory procurement and management benefited us greatly in the quarter and will remain a focus as part of our strategic objectives, as our strong balance sheet positions us for continued opportunistic growth.”

CONDENSED STATEMENTS OF INCOME

                           Three months ended           Nine months ended
                              December 31,                December 31,
                           2002        2001           2002         2001

     Net sales         $72,271,486  $67,429,014   $179,803,490  $170,036,590
     Cost of goods
      sold, buying
      and occupancy     49,627,384   47,885,312    126,592,231   119,851,914
     Gross profit       22,644,102   19,543,702     53,211,259    50,184,676
     Selling,
      general and
      administrative
      expenses          18,292,489   15,776,963     46,232,790    42,141,788

     Income from
      operations         4,351,613    3,766,739      6,978,469     8,042,888
     Interest
      expense             (147,858)    (100,751)      (272,385)      (30,223)
     Income before
      taxes              4,203,755    3,665,988      6,706,084     8,012,665
     Income tax
      provision          1,598,000    1,481,000      2,599,000     3,221,000

     Net income         $2,605,755   $2,184,988     $4,107,084    $4,791,665