Sport Chalet, Inc. reported that sales for its fiscal year ended March 31, 2004 increased 11.0% from $238.0 million last year to $264.2 million this year. The increase is the result of opening three stores this year and two last year, in addition to a comparable store sales increase of 3.7%. The comparable store sales increase reflects an improved economic climate and more seasonable winter weather conditions at the resorts frequented by the Company's customers.
Net income increased 9.3% from $4.2 million, or 60 cents per diluted share last year, to $4.5 million, or 65 cents per diluted share this year, primarily due to increased sales and improved gross profit as a percent of sales, partially offset by increased workers' compensation expense and the effect of a stock award directly from the Company's founder to certain executives of the Company. This stock award, which resulted in additional compensation expense of approximately $800,000 or 7 cents per diluted share, had no significant effect on the Company's cash flow.
For the fourth quarter ended March 31, 2004, sales increased 19.2% from $58.2 million to $69.4 million. The increase resulted from the opening of three stores in fiscal 2004, in addition to a comparable store sales increase of 10.5%. For the quarter ended March 31, 2004, net income increased 516.0% from $53,000, or $0.01 per diluted share, to $328,000, or $0.05 per diluted share, primarily due to increased sales and improved gross profit as a percent of sales, partially offset by increased workers' compensation expense and the effect of the stock award.
Commenting on the results, Craig Levra, Chairman and CEO said, “Coming off a very tough first quarter, I am proud our team worked so hard to improve the results of the subsequent three quarters. The retail climate is improving, and we are capitalizing on this by continuing our expansion. We plan to open five new stores and remodel four stores during this fiscal year. The continued expansion into Northern California includes Pleasanton in the East Bay area, along with Roseville and Elk Grove in the Sacramento area. Our first store in Central California will be in the city of Visalia. We also plan to open a store in the Santa Anita mall in the city of Arcadia within our Southern California market. The Company will remodel four mature stores to complement the look and feel of the newer stores. Although accelerated depreciation on fixtures and equipment for stores to be remodeled will dampen profitability in the short term, our overall advancing growth should leverage our ongoing investment in infrastructure, ultimately reducing overhead expenses as a percent of sales. With the scheduled openings and remodels, 44% of our store base will be three years old or less.”
