Sport Chalet, Inc. reported that sales for its fiscal year ended March 31, 2003 increased from $227.3 million last year to $238.0 million this year, a 4.7% increase. The increase is the result of opening two stores this year and three last year, offset by a comparable store sales decrease of 0.9%.
The comparable store decrease reflects a prolonged sluggish retail environment, lackluster economic recovery, and the war in Iraq. In addition, the decrease reflects a second year of increasingly unseasonable warm and dry winter weather conditions at the resorts frequented by those residing in Southern California throughout the third and fourth quarters.
Excluding winter-related merchandise, sales increased 7.0% in total, and 0.9% on a comparable store basis.
Net income decreased to $4.2 million, or $0.60 per diluted share, from $4.8 million, or $0.69 per diluted share in the prior year, primarily due to increased selling, general and administrative expense partially offset by improved merchandise margins.
For the fourth quarter, sales increased from $57.3 million for the quarter ended March 31, 2002, to $58.2 million for the same period this year, a 1.6% increase. The increase is the result of opening two stores this year, offset by a comparable store sales decrease of 4.0%.
Comparable store sales decreased as unseasonably warm and dry winter weather conditions resulted in significant decreases in sales of winter related merchandise. Excluding winter-related merchandise, sales increased 7.4% in total and 0.9% on a comparable store basis.
Net income increased to $53,000, or $0.01 per diluted share, from $2,000, or $0.00 per diluted share, in the prior year primarily due to improved merchandise margins partially offset by higher selling, general and administrative expense.
Commenting on the results, Craig Levra, Chairman and CEO said, “The retail climate continued to remain tough this year with economic recovery at a near stagnant pace, the war in Iraq, and the impact of back-to-back years of warm and dry winter weather conditions in our primary markets. Despite this, we were able to show earning increases over last year in three of the four quarters this year, while continuing to execute our strategic objectives and enhancing our infrastructure to support growth in the short and long term.”
The Company’s commitment to growth will be evidenced by its initial expansion into Northern California. Sport Chalet will be entering Northern California with two stores, one in the East Bay area and one in the Sacramento market. The first site will be located in the Contra Costa County city of Antioch, and the second site will be in central Sacramento. In addition to the expansion into Northern California, the Company will also open a store in San Bernardino County city of Redlands, further cementing its footprint in its dominant Southern California market. All three stores are scheduled to open in fall 2003, and will be consistent with the Company’s new store format. Commenting on the Company’s growth plans, Mr. Levra said, “We are very excited to be entering Northern California with these two key locations. It is our goal to bring to these new markets the same great product selection, knowledge and value-added services that have set Sport Chalet apart from the competition in Southern California for the last 44 years.”
CONDENSED STATEMENTS OF INCOME
Three months ended Twelve months ended
March 31, March 31,
2003 2002 2003 2002Net sales $58,229,885 $57,312,182 $238,033,375 $227,348,772
Cost of goods
sold, buying
and occupancy 42,147,271 42,238,722 168,739,502 162,090,636
Gross profit 16,082,614 15,073,460 69,293,873 65,258,136
Selling, general
and
administrative
expenses 15,934,981 14,984,410 62,167,771 57,126,198Income from
operations 147,633 89,050 7,126,102 8,131,938
Interest expense (34,370) (40,568) (306,755) (70,791)
Income before taxes 113,263 48,482 6,819,347 8,061,147
Income tax provision 60,000 46,000 2,659,000 3,267,000Net income $53,263 $2,482 $4,160,347 $4,794,147
