With help from tax loss carry-forwards extended under last years stimulus package, Sport Chalet, Inc. cut its net loss for the fiscal third quarter by 88% despite a decline in sales.
The 54-store California-based chain reported sales for the third quarter ended Dec. 27 decreased 8.9% to $95.3 million compared to $104.6 million for the third quarter of fiscal 2009. Net losses shrank to $3.8 million, or 27 cents per diluted share, compared to a net loss of $32.4 million, or $2.29 per diluted share, for the quarter ended Dec. 28, 2008.
SPCH attributed the sales decline primarily to a same-store sales decline of 10.8%, or $10.9 million, due primarily to the weak economy, and, to a lesser extent, competitors unusual promotional activity in Southern California.
Those negative effects were offset by sales from two new stores and other revenue not included in the same-store sales calculation. SPCH estimated competitors promotional activity shaved 0.7% off its same-store sales.
Still, the retailer was able to increase its gross profit as a percent of sales by 290 basis points to 25.2% of sales, thanks primarily to decreased markdowns and rent. SG&A as a percent of sales decreased by 970 basis points to 23.1% of sales, primarily due to cost containment initiatives that resulted in savings of $7.1 million for the quarter. Those came mainly from decreases in salaries, advertising, professional fees, and utilities.
Non-cash impairments charges held steady at $10.9 million, up just $200,000 from the third quarter of fiscal 2009. They were largely neutralized, however, by an income tax benefit of $9.1 million, down from $11.6 million recorded in the year earlier quarter. Both benefits were related to the portion of the 2009 net operating loss carry-back extended under last years federal stimulus act. SPCH received its $9.1 million refund in January 2010.
