Sport Chalet returned to profitability in its fiscal first quarter for the first time in five years on the strength of solid comp stores and team sales growth.
Gross profit decreased $0.5 million, or 1.9 percent, and as a percent of sales decreased to 27.9 percent from 28.8 percent, primarily due to an increase in merchandise costs, changes in the product mix, and ongoing customer satisfaction initiatives implemented in August 2011.
Selling, general and administrative (“SG&A”) expenses decreased $0.9 million, or 4.1 percent, primarily due to $0.8 million in savings from labor-related expenses. As a percent of sales, SG&A decreased to 24.7 percent from 26.1 percent.
Net income for the quarter ended July 1, 2012 increased $0.9 million to $0.1 million, or $0.01 per diluted share, compared to a net loss of $0.8 million, or $0.06 per diluted share, for the quarter ended July 3, 2011.
“We are happy with our first quarter results as we rebounded from the unseasonably warm and dry winter weather that significantly affected our sales and profitability in the third and fourth quarter of fiscal 2012,” said Chairman and CEO Craig Levra. “This quarter marked the first profitable first quarter in the past five fiscal years as we improved to net income of $0.1 million from a net loss of $0.8 million last year. This result validates our belief that the consistent improvements we have made to our business over the past few years have positioned us to return to profitability for fiscal 2013.”
“Despite the progress we made in the first quarter, there is still much room for improvement as we look ahead. Through the five weeks ended August 5, 2012, comparable store sales are up 3.8 percent, but the negative trends and effects in gross profit experienced during the first quarter have continued similarly in the second quarter. We are working to overcome this issue by focusing on our logistics initiatives including increased vendor collaboration with respect to merchandise shipping and handling for all vendors, which will lead to greater efficiencies in inventory and logistics. To that end, Danielle Dolloff has been promoted to the newly created position of Vice President — Planning and Logistics to lead these efforts. We continue to review our strategies to maximize our potential for driving profitable sales in this economy.”
Sport Chalet, Inc.
Consolidated Statements of Operations (Unaudited)
|13 weeks ended|
|July 1, 2012||July 3, 2011|
|(in thousands, except per share amounts)|
|Net sales||$ 83,849||$ 82,824|
|Cost of goods sold, buying and occupancy costs||60,481||59,000|
|Selling, general and administrative expenses||20,738||21,615|
|Depreciation and amortization||2,069||2,568|
|Income (loss) from operations||561||(359)|
|Income (loss) before income taxes||103||(824)|
|Income tax provision||—||2|
|Net income (loss)||$ 103||$ (826)|
|Earnings (loss) per share:|
|Basic||$ 0.01||$ (0.06)|
|Diluted||$ 0.01||$ (0.06)|