Sport Chalet reported net income reached $300,000, or 2 cents a share, in its fiscal fourth quarter ended April 3, 2011, against a loss of $300,000, or 2 cents, a year ago. The sporting goods retailer, based in Los Angeles, said it marked the first profitable quarter in 13 quarters. Sales in the quarter increased 8.8 percent to $98.2 million from $90.2 million a year ago.
The sales gain was primarily due to the extra week in the fourth quarter of fiscal 2011 which contributed $5.9 million to sales. Sales increased 2.4 percent excluding the extra week in the fourth quarter of fiscal year 2011, due to a comparable store sales increase of 1.3 percent on top of an increase of 5.7 percent for the fourth quarter of last year, and online and Team Sales divisions sales increases of 60 percent and 24 percent, respectively.
Gross profit as a percent of sales increased to 29.0 percent from 27.7 percent for the fourth quarter of last year primarily due to lower rent expense. Selling, general and administrative expenses (SG&A) as a percent of sales increased to 25.4 percent from 24.3 percent in the same period last year, primarily reflecting increases in labor and workers compensation expense. The increase in labor for store staff helped drive the improvement in comparable store sales.
Craig Levra, Chairman and CEO, said, “The fourth quarter marked our first profitable quarter in the prior 13 quarters. We were able to continue the growth of our Team Sales and online divisions, increase our comparable store sales and more importantly, return to profitability. We are pleased that comparable store sales maintained the stability in recent quarters compared to the significant decreases in fiscal 2009 and fiscal 2010.”
Full Year Results
For the fiscal year, sales increased 2.5 percent to $362.5 million from $353.7 million for fiscal 2010, primarily due to the extra week in the fourth quarter of fiscal 2011 which contributed $5.9 million to sales. Sales increased 0.8 percent, excluding the extra week in fiscal year 2011, due to online and Team Sales divisions sales increases of 110 percent and 15 percent, respectively, partially offset by a comparable store sales decrease of 0.4 percent. Continued weak macroeconomic conditions in our markets caused the slight decline in comparable store sales.
Gross profit as a percent of sales increased to 28.2 percent from 26.8 percent for fiscal 2010 primarily due to lower rent expense. SG&A as a percent of sales increased to 25.6 percent from 24.3 percent for fiscal 2010, primarily from increased labor, which helped increase the average sales transaction by 2.0 percent. Depreciation as a percent of sales declined to 2.9 percent from 3.6 percent as a result of the non-cash impairment charge of $10.9 million recorded in fiscal 2010 and the low level of capital expenditures in fiscal 2010 and fiscal 2011 with no new store openings or remodels. The company recorded an income tax benefit from a change to the net operating carryback regulations in fiscal 2010, while no provision was recorded in fiscal 2011.
Net loss for fiscal 2011 was reduced to $3.0 million, or 21 cents per diluted share, compared to a net loss of $8.3 million, or 59 cents per diluted share for fiscal 2010. Excluding the non-cash impairment charges and the effect of income taxes in fiscal years 2011 and 2010, the Company’s net loss was reduced to $3.0 million, or 21 cents per diluted share for fiscal 2011, from a net loss of $6.5 million, or 46 cents per diluted share for fiscal 2010.
Levra concluded, “During the year, we increased our store staff and customer service to allow our sales associates to focus on our expanding assortment of specialty brands, which resulted in a higher average sales transaction.”
“For fiscal 2012, we continue to micro-merchandise utilizing Action Pass data, improve the functionality of sportchalet.com, and refine our store strategy. These steps combined with our improving operating performance position us for future growth. Our company continues to evolve and adapt, is markedly better and we are excited about our future.”
Liquidity
During fiscal 2011, Sport Chalet signed an expanded credit agreement with Bank of America that allows the company to borrow on more favorable terms and conditions. On April 3, 2011, the credit facility had a borrowing capacity of $65.0 million, of which the Company utilized $42.5 million (including a letter of credit of $1.6 million) and had $16.0 million in availability, $10.2 million above the EBITDA covenant availability requirement of $5.8 million. With the expanded credit facility in place, the increased availability provides the Company with the financial flexibility to pursue its operating and strategic initiatives.
Sport Chalet has 55 stores in California, Nevada, Arizona and Utah.
Gross profit as a percent of sales increased to 29.0 percent from 27.7 percent for the fourth quarter of last year primarily due to lower rent expense. Selling, general and administrative expenses (SG&A) as a percent of sales increased to 25.4 percent from 24.3 percent in the same period last year, primarily reflecting increases in labor and workers compensation expense. The increase in labor for store staff helped drive the improvement in comparable store sales.
Craig Levra, Chairman and CEO, said, “The fourth quarter marked our first profitable quarter in the prior 13 quarters. We were able to continue the growth of our Team Sales and online divisions, increase our comparable store sales and more importantly, return to profitability. We are pleased that comparable store sales maintained the stability in recent quarters compared to the significant decreases in fiscal 2009 and fiscal 2010.”
Full Year Results
For the fiscal year, sales increased 2.5 percent to $362.5 million from $353.7 million for fiscal 2010, primarily due to the extra week in the fourth quarter of fiscal 2011 which contributed $5.9 million to sales. Sales increased 0.8 percent, excluding the extra week in fiscal year 2011, due to online and Team Sales divisions sales increases of 110 percent and 15 percent, respectively, partially offset by a comparable store sales decrease of 0.4 percent. Continued weak macroeconomic conditions in our markets caused the slight decline in comparable store sales.
Gross profit as a percent of sales increased to 28.2 percent from 26.8 percent for fiscal 2010 primarily due to lower rent expense. SG&A as a percent of sales increased to 25.6 percent from 24.3 percent for fiscal 2010, primarily from increased labor, which helped increase the average sales transaction by 2.0 percent. Depreciation as a percent of sales declined to 2.9 percent from 3.6 percent as a result of the non-cash impairment charge of $10.9 million recorded in fiscal 2010 and the low level of capital expenditures in fiscal 2010 and fiscal 2011 with no new store openings or remodels. The company recorded an income tax benefit from a change to the net operating carryback regulations in fiscal 2010, while no provision was recorded in fiscal 2011.
Net loss for fiscal 2011 was reduced to $3.0 million, or 21 cents per diluted share, compared to a net loss of $8.3 million, or 59 cents per diluted share for fiscal 2010. Excluding the non-cash impairment charges and the effect of income taxes in fiscal years 2011 and 2010, the Company’s net loss was reduced to $3.0 million, or 21 cents per diluted share for fiscal 2011, from a net loss of $6.5 million, or 46 cents per diluted share for fiscal 2010.
Levra concluded, “During the year, we increased our store staff and customer service to allow our sales associates to focus on our expanding assortment of specialty brands, which resulted in a higher average sales transaction.”
“For fiscal 2012, we continue to micro-merchandise utilizing Action Pass data, improve the functionality of sportchalet.com, and refine our store strategy. These steps combined with our improving operating performance position us for future growth. Our company continues to evolve and adapt, is markedly better and we are excited about our future.”
Liquidity
During fiscal 2011, Sport Chalet signed an expanded credit agreement with Bank of America that allows the company to borrow on more favorable terms and conditions. On April 3, 2011, the credit facility had a borrowing capacity of $65.0 million, of which the Company utilized $42.5 million (including a letter of credit of $1.6 million) and had $16.0 million in availability, $10.2 million above the EBITDA covenant availability requirement of $5.8 million. With the expanded credit facility in place, the increased availability provides the Company with the financial flexibility to pursue its operating and strategic initiatives.
Sport Chalet has 55 stores in California, Nevada, Arizona and Utah.
