Second quarter sales for Sport Chalet, Inc. decreased 1.2% to $96.5 million for the second quarter of fiscal 2009 from $97.7 million for the second quarter of fiscal 2008.


Seven new stores not included in same store sales contributed $6.4 million in sales for the quarter while same store sales decreased 6.7%. Same store sales were negatively impacted primarily by soft macroeconomic conditions and to a lesser extent new store openings by the Company and competitors in certain markets.

Gross profit as a percent of sales was 26.5% compared to 30.4% for the second quarter of last year. The decline was primarily due to increased promotional activity, increased rent as a percent of sales in newer stores and increased use of Action Pass as consumers accumulate points that allow for certain reward certificates to be used toward their purchases.


Selling, general and administrative expenses as a percent of sales increased to 29.6% from 25.4% in the same period last year, reflecting the decrease in comparable store sales, the expenses associated with new stores which take time to ramp up and an increase in professional fees.

Net loss for the second quarter of 2009 was $4.2 million, or 30 cents per diluted share, compared to a net income of $739,000, or 5 cents per diluted share, for the second quarter last year.


Craig Levra, Chairman and CEO, stated, “During the quarter, we continued to experience a difficult retail environment. As a result, we increased our promotional activity during the quarter and cleared through aged inventory which, along with increased use of Action Pass, pressured our gross margin. Nonetheless, we are pleased with our inventory position, particularly the improved level of new merchandise in our stores as we head into the holiday selling season. The infrastructure and systems enhancements we have made in the last two years are continuing to benefit us by enabling us to operate more efficiently and better meet the sporting goods needs of our customers.''


 

                                           SPORT CHALET, INC.

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

                            Three months ended     Six months ended
                           ——————–  ——————–
                           Sept. 28,  Sept. 30,  Sept. 28,  Sept. 30,
                             2008       2007       2008       2007
                           ———  ———  ———  ———
                             (in thousands, except per share amounts)
Net sales                 $  96,457  $  97,669  $ 183,577  $ 189,223
Cost of goods sold,
  buying and occupancy
   costs                      70,861     67,959    135,273    133,361
                           ———  ———  ———  ———
Gross profit                 25,596     29,710     48,304     55,862

Selling, general and 


administrative expenses 28,506     24,778     54,475     48,522


Depreciation and
  amortization               3,656      3,325      7,267      6,488
                           ———  ———  ———  ———
Income (loss) from
  operations                 (6,566)     1,607    (13,438)       852

Interest expense             422        357      1,079        716
                           ———  ———  ———  ———
Income (loss) before
  taxes                       (6,988)     1,250    (14,517)       136

Income tax provision
  (benefit)                   (2,767)       511     (5,770)        61
                           ———  ———  ———  ———
Net income (loss)        $(4,221)     $739    $(8,747)      $75
                           =========  =========  =========  =========

Earnings (loss) per
  share:
  Basic                    $(0.30)      $0.05    $(0.62)    $0.01
                           =========  =========  =========  =========
  Diluted                  $(0.30)      $0.05    $(0.62)    $0.01
                           =========  =========  =========  =========