Sport Chalet Posts 17% Q1 Sales Gain; Net Jumps 36%

Sport Chalet, Inc. saw sales increase 17.0% to $84.4 million for the company’s fiscal first quarter after posting sales of $72.1 million for same period last year. The retailer received a $6.9 million boost from five new stores as well as a comparable sales increase of 3.3%. The same store sales increase was due to unusually late snowfall in local resorts which drove demand for winter related items early in the quarter followed by unusually warm weather which drove summer merchandise sales late in the quarter. Sales for the quarter also benefited by $2.6 million from two additional days as a result of the company’s calendar change.

Gross profit as a percent of sales decreased 20 basis points to 29.3% from 29.5% in the first quarter of last year. The slight decrease was primarily due to additional markdowns taken to stimulate sales of slow moving merchandise in select departments. Selling, general and administrative expenses as a percent of sales improved by 40 basis points to 28.2% from 28.6% last year. The decrease was a result of increased savings from workers compensation insurance as well as higher litigation reserves from the first quarter of last year which were not repeated this year.

Net income increased 36.2% to $530,000, or 4 cents per diluted share, compared to $389,000, or 3 cents per diluted share, for the first quarter last year.

Craig Levra, Chairman and CEO, stated, “We are pleased with our results in the first quarter as well as our ability to continue to make progress on long- term growth initiatives. Though we were faced with unusual weather conditions during the quarter, our strong merchandise mix and “expert” customer service helped drive our sales for the quarter and we were able to increase our comparable store sales by a solid 3.3%. We continued to execute on our store expansion initiative with the opening of our 41st store in Thousand Oaks, California. Additionally our safety program, which continues to be a focus for us, demonstrated its effectiveness during the quarter, creating savings in our workers compensation expense. Overall we look to continue to make progress on our long-term initiatives in the balance of the year.”

                              SPORT CHALET, INC.

                 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                 (UNAUDITED)

                                                      Quarter ended
                                              July 2, 2006     June 30, 2005

    Net sales                                  $84,418,339       $72,192,395
    Cost of goods sold, buying and
     occupancy costs                            59,669,496        50,888,759
    Gross profit                                24,748,843        21,303,636

    Selling, general and administrative
     expenses                                   23,828,887        20,648,405
    Income from operations                         919,956           655,231

    Interest expense                                38,520             1,887
    Income before taxes                            881,436           653,344

    Income tax provision                           351,025           264,000
    Net income                                    $530,411          $389,344

    Earnings per share:
      Basic                                          $0.04             $0.03
      Diluted                                        $0.04             $0.03

    Weighted average number of common shares
     outstanding:
      Basic                                     13,773,398        13,372,736
      Diluted                                   14,191,130        14,096,310