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 email@example.com (818) 949-5300 ext. 5728 Sport Chalet
Sport Chalet Reports Third Quarter and Nine Months Fiscal 2013 Results
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