Sport Chalet, Inc. reported sales in the second quarter ended Sept. 27 decreased 7.9% to $88.8 million from $96.5 million a year ago as same-store sales decreased 12.4%. But the company noted that for the first half of fiscal 2010, it
achieved EBITDA of $4.0 million compared to the minimum requirement of
$0.8 million EBITDA contained in the company's current bank loan
agreement.
The retailers noted that the bank requirement measures cumulative EBITDA on a year-to-date basis
each month; accordingly, the $3.2 million achieved above the minimum
EBITDA requirement in the first half of fiscal 2010 can be used to
offset any future shortfalls during the remainder of fiscal 2010.
In the second quarter, three
new stores not included in same store sales contributed $2.3 million in
sales for the quarter. Same
store sales were negatively impacted primarily by continued weak macro
economic conditions.
Gross profit as a percent of sales in the quarter increased to 28.0% for the second quarter of fiscal 2010 compared to 26.5% for the second quarter of fiscal 2009. Selling, general and administrative expenses as a percent of sales decreased to 24.8% from 29.6% in the same period last year, primarily due to cost containment initiatives which resulted in savings of $7.3 million from decreases in salaries, advertising, professional fees, utilities, repairs and maintenance.
Net loss for the second quarter of fiscal 2010 was $1.2 million, 9 cents per diluted share, compared to a net loss of $4.2 million, or 30 cents per diluted share, for the second quarter of fiscal 2009. The net loss for the second quarter of fiscal 2010 did not reflect any net tax benefit (because of tax valuation allowances), while the second quarter of fiscal 2009 reflected a net tax benefit of $2.8 million, or $0.20 per share. Without the tax benefit, the net loss for the second quarter of fiscal 2009 would have been $7.0 million, or 49 cents per share.
Six-Month Results
For the six months ended September 27, sales decreased 8.4% to $168.2 million from $183.6 million for the first six months of the prior year. Sales from four new stores not included in same store sales contributed $6.1 million to total sales for the first six months of fiscal 2010. Same store sales decreased 13.6% for the six-month period. Gross profit as a percent of sales was 27.2% for the six months ended September 27, 2009 compared to 26.3% in the same period last year. The increase was primarily a result of decreased markdowns and rent. SG&A as a percent of sales for the six-month period was 25.0% compared to 29.7% in the same period of fiscal 2009, because the cost containment initiatives more than offset the decline in sales.
Net loss for the six months ended September 27, 2009 was $4.2 million, or 30 cents per diluted share, compared to a net loss of $8.7 million, or 62 cents per diluted share, for the six months ended September 28, 2008. The net loss for the six months ended September 27, 2009 did not reflect any net tax benefit (because of tax valuation allowances), while the six months ended September 28, 2008 reflected a net tax benefit of $5.8 million, or $0.41 per share. Without the tax benefit, the net loss for the six months ended September 28, 2008 would have been $14.5 million, or $1.03 per share.
Craig Levra, Chairman and CEO, concluded, “We are pleased with our ability to execute our business plan in what continues to be a challenging economic environment. We remain focused on effectively managing our inventory and expense levels. Our recent results reflect the steps we have taken over the last year to strengthen our liquidity by reducing expenses and improving efficiency and we are cautiously optimistic as we head into our most important holiday season. Though global economic conditions continue to be very challenging, we remain committed to our strategy of providing 'expert' advice and customer service and be first to market with performance, technology and lifestyle merchandise.”
SPORT CHALET, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
13 weeks ended 26 weeks ended
---------------- ------------------
Sept. Sept. Sept. Sept.
27, 28, 27, 28,
2009 2008 2009 2008
------- ------- -------- --------
(in thousands, except share amounts)
Net sales $88,811 $96,457 $168,214 $183,577
Cost of goods sold, buying and
occupancy costs 63,980 70,861 122,393 135,273
------- ------- -------- --------
Gross profit 24,831 25,596 45,821 48,304
Selling, general and
administrative expenses 22,066 28,506 42,003 54,475
Depreciation and amortization 3,274 3,656 6,730 7,267
------- ------- -------- --------
Loss from operations (509) (6,566) (2,912) (13,438)
Interest expense 703 422 1,284 1,079
------- ------- -------- --------
Loss before taxes (1,212) (6,988) (4,196) (14,517)
Income tax benefit -- (2,767) -- (5,770)
------- ------- -------- --------
Net loss $(1,212) $(4,221) $ (4,196) $ (8,747)
======= ======= ======== ========
Loss per share:
Basic $ (0.09) $ (0.30) $ (0.30) $ (0.62)
======= ======= ======== ========
Diluted $ (0.09) $ (0.30) $ (0.30) $ (0.62)
======= ======= ======== ========
Weighted average number of
common shares outstanding:
Basic 14,123 14,123 14,123 14,123
======= ======= ======== ========
Diluted 14,123 14,123 14,123 14,123
