Sport Chalet Reports Third Quarter and Nine Months Fiscal 2013 Results

Sport Chalet Reports Third Quarter and Nine Months Fiscal 2013 Results

LOS ANGELES, Feb. 6, 2013 (GLOBE NEWSWIRE) -- Sport Chalet, Inc.
(Nasdaq:SPCHA) (Nasdaq:SPCHB), a leading operator of full-service, specialty
sporting goods stores, today announced its financial results for the third
quarter and nine months ended December 30, 2012.

Summary

  *Recent growth in comparable store sales and profitability plateaued as
    warm weather and a continuing trend for consumers to postpone holiday
    shopping negatively impacted the third quarter of fiscal 2013;
  *Net loss was $1.9 million compared to a net loss of $1.0 million in the
    third quarter of the prior year;
  *Comparable store sales decreased 0.7% for the quarter ended December 30,
    2012 compared to the same period last year;
  *Team Sales Division sales increased 17.9% from the third quarter of last
    year;
  *Online sales increased 32.6% from the third quarter of last year; and
  *Fourth quarter comparable store sales through the five weeks ended
    February 3, 2013 increased 20.3%.

Third Quarter Results

Sales increased $0.3 million, or 0.4%, to $97.6 million for the 13 weeks ended
December 30, 2012 from $97.2 million for the 13 weeks ended January 1, 2012.
The slight sales increase is primarily the result of sales increases in the
Team Sales Division and online of 17.9% and 32.6%, respectively, partially
offset by a 0.7% decrease in comparable store sales. The comparable store
sales decrease of 0.7%, which is an improvement from the 2.0% decrease in the
same period last year, was primarily due to warm and dry winter weather for
the majority of the holiday shopping season exacerbated by a bad winter sports
season last year, a change in our strategy to be less promotional, and general
consumer caution from the uncertainty about regional and national economic
conditions.

Gross profit increased $0.6 million, or 2.4%, and as a percent of sales
increased to 27.6% from 27.1%. The increase in gross profit is primarily the
result of the increase in sales and a reduction in markdowns from a change in
our strategy to be less promotional during the holiday period, specifically on
Black Friday/Cyber Monday weekend, partially offset by a payment received in
the prior year from a landlord as part of a store's closing.

Selling, general and administrative ("SG&A") expenses increased $1.7 million,
or 6.9%, primarily due to increases of $0.7 million in advertising and $0.6
million in labor-related expenses, such as salaries, payroll taxes and
employee health insurance coverage. The increase in advertising served to
focus customer attention on our technical merchandise and innovative brand
offerings while being less promotional. As a percent of sales, SG&A increased
to 26.7% from 25.1%.Depreciation decreased $0.4 million as a result of the
low level of capital expenditures in recent fiscal years with no new store
openings or significant remodels.

Net loss for the quarter ended December 30, 2012 increased $0.8 million to
$1.9 million, or $0.13 per diluted share, from a net loss of $1.0 million, or
$0.07 per diluted share, for the quarter ended January 1, 2012.

Craig Levra, Chairman and CEO, stated, "While this was a tough holiday season
for many retailers, our third quarter results were well below our
expectations. Following a strong summer and fall, positive sales trends
deteriorated significantly in November and for the first two weeks of
December.Unseasonably warm and dry weather coming on top of a bad winter
sports season last year, combined with our customers' general economic
uncertainty and our desire to be less promotional all contributed to the
decrease in comparable store sales.We have exited the holiday season with our
inventory well positioned, having maintained our strong pricing discipline and
brand integrity.Additionally, we are encouraged by the improvement in sales
trends since mid-December and its continuation into our fourth quarter as
comparable store sales increased 20.3% through the five weeks ended February
3, 2013."

Mr. Levra continued by noting, "We believe that the January sales numbers
reflect both the return to more 'normal' winter weather conditions and the
continued response of our customers to our strategy of being first to market
with performance, technology and lifestyle merchandise as evidenced by our
growth in average ticket size.In addition to our differentiated product
offerings, our Team Sales Division and online sales also are essential
channels for growth and expansion of our footprint and customer
base.Therefore, we continue to heavily invest in these areas where we believe
we can distinguish ourselves from our competition and provide the greatest
financial return.To that end, a prioritization of talent and resources is
underway to continue growing businesses that deliver an overall seamless
customer experience while more closely linking online, Team Sales Division and
our retail stores.Recent examples include our launch of same day delivery
currently being tested in three select markets and online drop ship to
customers with vendor inventory to expand our product offering both online and
in stores."

Nine-Month Results

For the nine months ended December 30, 2012, sales increased 1.8% to $272.9
million from $268.0 million for the first nine months of the prior fiscal
year.The sales increase is primarily due to a comparable store sales increase
of 2.3%, while sales for the Team Sales Division and online increased 18.6%
and 21.6%, respectively, partially offset by one store closure which
contributed $3.2 million in sales in the prior year.

Gross profit as a percent of sales decreased to 27.7% from 28.3% for the first
nine months of last year.The 0.6% decrease as a percent of sales is primarily
due to costs related to ongoing customer satisfaction initiatives implemented
in August 2011, changes in merchandise costs and in the product mix, and a
payment received in the prior year from a landlord as part of a store's
closing.

SG&A expenses increased $0.4 million, or 0.6%, primarily due to an increase of
$1.0 million in advertising partially offset by savings from labor-related
expenses, such as self-insurance for employee health insurance coverage and
stock option expense.SG&A expenses as a percent of sales decreased to 25.2%
from 25.5%. Depreciation decreased $1.2 million as a result of the low level
of capital expenditures in recent fiscal years with no new store openings or
significant remodels.

The Company's net loss for the nine months ended December 30, 2012 decreased
to $1.0 million, or $0.07 per diluted share, from a net loss of $1.3 million,
or $0.09 per diluted share, for the same period last year.

Liquidity

On December 30, 2012, the Company's bank credit facility had a borrowing
capacity of $70.0 million, of which the Company utilized $40.8 million
(including a letter of credit for $3.6 million) and had $37.0 million in
availability including cash compared to $36.9 million in availability
including cash for the same period ended last year.The amount of availability
fluctuates due to seasonal changes throughout the year.

New Store Opening

As previously announced, the Company currently plans to open a next generation
Sport Chalet this summer in Downtown Los Angeles.Designed by Gensler, the
world's leading architect, this store will incorporate a new design template
of enhanced displays, fixtures, and graphics to reinforce the Sport Chalet
brand and its market positioning as a destination for premium brands,
technical merchandise and the highest quality service offerings. Sport Chalet
will be an anchor tenant at Brookfield Office Properties' FIGat7th, the
destination retail center at the intersection of Figueroa Street and 7th
Street that has undergone a $40 million redevelopment.The store will occupy
27,300 square feet of space at the lower courtyard level, and will join City
Target as the first new anchors at the redeveloped FIGat7th. While the
Company currently has no plans to open additional stores and future store
openings are dependent on the availability of financing, it believes this new
concept will allow an immediate opportunity for growth across a wider
geography.

Existing Store Closings

The Company currently plans to close two existing stores in fiscal 2014. The
two stores, which are located in Antioch, California and Phoenix, Arizona, are
being closed as part of the Company's ongoing and rigorous approach to its
portfolio of stores, allocating resources towards the greatest growth
opportunities, as well as unwavering commitment to its long-term business
strategy of returning to sustained profitability.

Conference Call Info

The Company will be hosting a conference call and audio webcast, both open to
the public, today at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time) to review
its financial results for the third quarter and nine months ended December 30,
2012. Investors will have the opportunity to listen to the earnings
conference call over the internet through an audio webcast located at
http://www.media-server.com/m/p/pnqjom3g.To listen to the live call, please
go to the website at least fifteen minutes early to register and download and
install any necessary audio software.The conference call may also be accessed
by dialing (866) 700-7441 and entering passcode 57175936.A dial-in replay of
the call will be available approximately two hours after the conference call
through Midnight Pacific Time on Friday, March 8, 2013 by dialing (888)
286-8010 and entering passcode 78384903.

About Sport Chalet, Inc.

Sport Chalet, founded in 1959 by Norbert Olberz, is a leading, full service
specialty retailer with 54 stores in Arizona, California, Nevada and Utah;
Sport Chalet online at www.sportchalet.com; and a Team Sales Division.The
Company offers over 50 specialty services for the sports enthusiast, including
online same day delivery, climbing, backcountry skiing, ski mountaineering,
avalanche education, and mountain trekking instruction, car rack installation,
snowboard and ski rental and repair, Scuba training and certification, Scuba
boat charters, team sales, gait analysis, baseball/softball glove steaming and
lacing, racquet stringing, and bicycle tune-up and repair at its store
locations.

The Sport Chalet, Inc. logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=10020

Forward-Looking Statements

Except for historical information contained herein, the statements in this
release are forward-looking and made pursuant to the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995.Forward-looking
statements involve known and unknown risks and uncertainties that may cause
the Company's actual results in future periods to differ materially from
forecasted results. Those risks include, among other things, the negative
effect of the economic downturn on the Company's sales, limitations on
borrowing under the Company's bank credit facility, the Company's ability to
control operating expenses and costs, the competitive environment of the
sporting goods industry in general and in the Company's specific market areas,
inflation, the challenge of maintaining its competitive position, the
Company's ability to manage the growth of its Team Sales Division and online
business, changes in costs of goods and services, and the weather and economic
conditions in general and in specific market areas. These and other risks are
more fully described in the Company's filings with the Securities and Exchange
Commission.

Sport Chalet, Inc.
                                                                
Consolidated Statements of Operations (Unaudited)
                                                                
                              13 weeks ended        39 weeks ended
                              December 30, January 1, December 30, January 1,
                               2012         2012       2012         2012
                              (in thousands, except per share amounts)
Net sales                     $97,567    $97,223  $272,868   $268,027
Cost of goods sold, buying and 70,642      70,917    197,356     192,198
occupancy costs
Gross profit                  26,925      26,306    75,512      75,829
                                                                
Selling, general and           26,097      24,410    68,759      68,365
administrative expenses
Depreciation and amortization  2,105       2,468     6,215       7,365
(Loss) income from operations (1,277)     (572)     538         99
                                                                
Interest expense              608         464       1,558       1,360
Loss before income taxes      (1,885)     (1,036)   (1,020)     (1,261)
                                                                
Income tax provision           --         --       2           2
Net loss                       $(1,885)   $(1,036) $(1,022)   $(1,263)
                                                                
Loss per share:                                                  
Basic and diluted              $(0.13)    $(0.07)  $(0.07)    $(0.09)
                                                                
Weighted average number of                                       
common sharesoutstanding:
Basic and diluted              14,190      14,190    14,190      14,190



Sport Chalet, Inc.
                                                            
Consolidated Balance Sheets
                                                            
                                         December 30,        April 1,
                                         2012                2012
                                         (Unaudited)         
Assets                                    (in thousands, except share amounts)
Current assets:                                              
Cash and cash equivalents                 $7,867            $2,811
Accounts receivable, net                  8,049              2,777
Merchandise inventories                  110,051            98,181
Prepaid expenses and other current        1,618              1,603
assets
Total current assets                     127,585            105,372
                                                            
Fixed assets, net                         19,165             22,081
Total assets                             $146,750          $127,453
                                                            
Liabilities and stockholders' equity                         
Current liabilities:                                         
Accounts payable                         $46,654           $28,220
Loan payable to bank                      37,333             41,255
Salaries and wages payable               5,345              2,980
Other accrued expenses                   22,878             17,370
Total current liabilities                112,210            89,825
                                                            
Deferred rent                             17,067             19,340
Commitments and contingencies                                
                                                            
Stockholders' equity:                                        
Preferred stock, $.01 par value:                             
Authorized shares – 2,000,000                                
Issued and outstanding shares – none      --                --
Class A Common Stock, $.01 par value:                        
Authorized shares – 46,000,000                               
Issued and outstanding shares –                              
12,414,490 at
December 30, 2012 and April 1, 2012       124                124
Class B Common Stock, $.01 par value:                        
Authorized shares – 2,000,000                                
Issued and outstanding shares – 1,775,821                    
at
December 30, 2012 and April 1, 2012       18                 18
Additional paid-in capital               37,228             37,021
Accumulated deficit                       (19,897)           (18,875)
Total stockholders' equity               17,473             18,288
Total liabilities and stockholders'       $146,750          $127,453
equity



Sport Chalet, Inc.
                                                             
Consolidated Statements of Cash Flows (Unaudited)
                                                             
                                            39 weeks ended
                                            December 30, 2012 January 1, 2012
                                            (in thousands)
Operating activities                                          
Net loss                                     $(1,022)        $(1,263)
Adjustments to reconcile net loss to net                      
cashprovided by operating activities:
Depreciation and amortization               6,215            7,365
(Gain) loss on disposal of property and      (16)             43
equipment
Share-based compensation                     207              801
Changes in operating assets and liabilities:                  
Accounts receivable                         (5,272)          (2,649)
Merchandise inventories                     (11,870)         (13,416)
Prepaid expenses and other current assets   (15)             (5)
Accounts payable                            16,639           22,261
Salaries and wages payable                  2,365            1,623
Other accrued expenses                      4,984            3,603
Deferred rent                                (2,273)          (2,119)
Net cash provided by operating activities   9,942            16,244
                                                             
Investing activities                                          
Purchase of fixed assets                    (980)            (2,980)
Proceeds from sale of assets                 16               60
Net cash used in investing activities       (964)            (2,920)
                                                             
Financing activities                                          
Proceeds from bank borrowing                 279,734          273,584
Repayment of bank borrowing                  (283,656)        (285,933)
Net cash used in financing activities        (3,922)          (12,349)
                                                             
Increase in cash and cash equivalents       5,056            975
Cash and cash equivalents at beginning of    2,811            51
period
Cash and cash equivalents at end of period   $7,867          $1,026
                                                             
Supplemental disclosure of cash flow                          
information
Cash paid during the period for:                             
Interest                                    $1,558          $1,338
Income tax                                   $2              $2
                                                             
Supplemental disclosure of non-cash                           
investingand financing activities
Purchases of fixed assets on credit          983              --
Fixed assets acquired under capital leases   $524            $722

CONTACT: Howard Kaminsky, Chief Financial Officer
         investorrelations@sportchalet.com
         (818) 949-5300 ext. 5728

Sport Chalet