Sport Chalet, Inc. demonstrated the high cost of sustaining a high-tech/high-touch retailing model last week when it announced it had engaged an investment bank to scout investors needed to implement its strategic plan.


The Los Angeles-based retailer said Cappello Capital Corp. of Santa Monica, CA will help it explore a range of options, including strategic partners, investors, alliances and joint ventures. The announcement comes as SPCH’s shares trade at the $1.30 level – near a four year low.


“While we lack the capital of some of our larger competitors, over the past year we have taken definitive steps to position Sport Chalet for future growth,” said Craig Levra, SPCH Chairman and CEO. “We believe that in collaboration with the right partner, we can more expeditiously implement our growth plans across all channels.”


SPCH’s model has long focused on stimulating demand by helping people learn how to participate in a wide range of sports through clinics, lessons and gear rental. It operates dive pools in 32 of its stores and employs certified instructors to provide lessons in rock climbing, SUP, snowboarding and skiing. It also offers  gear rental for those and other activities as part of a “try-before-you-buy” strategy.



SPCH has invested significantly the last six years to adapt to consumer’s rapidly changing shopping habits. It has implemented a SAP system, designed and opened its first next-generation store, launched a loyalty program and launched a new site for its team sales division.


Nevertheless, it has been the worst performing publically traded sporting goods retailer since the recession, due in part to its concentration in Arizona, California and Nevada, where the housing crisis was most acute.


Now the retailer is focusing on its next set of strategic plans. They include rolling out its new store format and driving more traffic to its online stores, which derive more than half their revenue from outside the four states where it operates its 52 bricks-and-mortar stores. The company is particularly intent on using the data it is collecting through its Action Pass loyalty program and rapidly growing online sales to expand one-on-one marketing and dial in assortments at the individual store level. Action Pass members spend 65 percent more per transaction at Sport Chalet than other customers. While the company added 400,000 new Action Pass members in fiscal 2013, keeping them engaged will require offering a steady stream of personalized messages. On top of this, SPCH says it is committed to offering industry-leading mobile and digital access to engage with customers anywhere, any time on any device. Finally, it remains committed to local marketing and community-based merchandising programs.


“We are very impressed with Sport Chalet's strategic initiatives,” said Alexander L. Cappello, Chairman and CEO of Cappello Capital Corp, which provides investment advice to a $52 billion mutual fund management company. “And we anticipate strong interest from potential strategic partners.”