After experiencing a very strong snow season in California last year and reporting one of its most successful winter seasons ever, Sport Chalet was able to maintain some slight growth against some very difficult comparisons. The company reported a 3.7% sales increase for the fiscal third quarter ended December 31, while same-store sales decreased 1.8% for the quarter. Excluding winter-related merchandise, same-store sales increased 3.0% for the quarter on top of a 3.4% increase for the same quarter last year.
Net income was $3.7 million, or 26 cents per diluted share, for the fiscal third quarter last year compared to $3.0 million, or 22 cents per diluted share, for this year. Gross margin slipped 60 basis points from 32.5% last year to 31.9% this year, primarily due to higher rent expenses and new occupancy accounting rules for stores opened during Q3. SG&A expenses increased 60 basis points to 26.5% of sales in Q3, with much of the increase related to greater advertising expenses for the holiday season and new store openings. These advertising expenses were partially due to new locations in Arizona and partially due to their first TV campaign designed to spur winter sales in a very difficult season. SPCH Chairman and CEO Craig Levra said that December comp store sales were up 4.7% on top of a 3.7% gain last year.
On a category basis, Mr. Levra said that apparel was strongest, particularly in golf, camping, and Sport Chalets “mountain shop.” Under Armour product was said to be “performing well” especially the cold weather product. Mr. Levra believes the company will see some benefit from the Olympics as people become more motivated to participate in winter sports, but the increase will not be as profound as when the event was held in Salt Lake City.
