LOS ANGELES, Nov. 4, 2009 (GLOBE NEWSWIRE) -- Sport Chalet, Inc. (Nasdaq:SPCHA) (Nasdaq:SPCHB) today announced financial results for its second quarter ended September 27, 2009. In addition, the Company announced 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 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.
Second Quarter Results
Sales decreased 7.9% to $88.8 million for the second quarter of fiscal 2010 from $96.5 million for the second quarter of fiscal 2009. Three new stores not included in same store sales contributed $2.3 million in sales for the quarter while same store sales decreased 12.4%. Same store sales were negatively impacted primarily by continued weak macro economic conditions.
Gross profit as a percent of sales 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, or $0.09 per diluted share, compared to a net loss of $4.2 million, or $0.30 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 $0.49 per share.
Six-Month Results
For the six months ended September 27, 2009, 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 $0.30 per diluted share, compared to a net loss of $8.7 million, or $0.62 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."
About Sport Chalet, Inc.
Sport Chalet, founded in 1959 by Norbert Olberz, is a leading operator of full service specialty sporting goods stores in California, Nevada, Arizona and Utah. The Company offers over 50 services for the serious sports enthusiast, including backpacking, canyoneering, and kayaking instruction, custom golf club fitting and repair, snowboard and ski rental and repair, SCUBA training and certification, SCUBA boat charters, team sales, racquet stringing, and bicycle tune-up and repair throughout its 55 locations. The address for Sport Chalet's web site is www.sportchalet.com.
Disclosure Regarding 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, including any statement concerning the Company's prospects or its ability to identify and implement opportunities to improve its results of operations or prospects. 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 reduce an adequate amount of operating expenses and control costs, the competitive environment in the sporting goods industry in general and in the Company's specific market areas, inflation, the challenge of maintaining its competitive position, changes in costs of goods and services, 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.
Discussion Regarding Non-GAAP Financial Disclosures
This release provides information about EBITDA as defined in the Company's current bank loan agreement. This non-GAAP measure of liquidity is included in this release solely to provide information concerning the Company's performance relative to benchmarks contained in the bank loan agreement.
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
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SPORT CHALET, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
Sept. 27, March 29,
2009 2009
-------- --------
(Unaudited)
Assets (in thousands,
except share amounts)
Current assets:
Cash and cash equivalents $ 499 $ 290
Accounts receivable, net 4,248 1,434
Merchandise inventories 93,970 88,431
Prepaid expenses and other current assets 1,193 2,178
Income tax receivable 3 1,004
-------- --------
Total current assets 99,913 93,337
Fixed assets, net 51,349 57,718
-------- --------
Total assets $151,262 $151,055
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Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 29,706 $ 31,083
Loan payable to bank 49,124 39,140
Salaries and wages payable 4,169 4,150
Other accrued expenses 15,236 19,379
-------- --------
Total current liabilities 98,235 93,752
Deferred rent 24,943 25,217
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 - 12,359,990
at September 27, 2009 and March 29, 2009 124 124
Class B Common Stock, $.01 par value:
Authorized shares - 2,000,000
Issued and outstanding shares - 1,763,321
at September 27, 2009 and March 29, 2009 18 18
Additional paid-in capital 34,652 34,458
Accumulated deficit (6,710) (2,514)
-------- --------
Total stockholders' equity 28,084 32,086
-------- --------
Total liabilities and stockholders' equity $151,262 $151,055
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SPORT CHALET, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
26 weeks ended
---------------------
Sept. 27, Sept. 28,
2009 2008
--------- ---------
(in thousands)
Operating activities
Net loss $ (4,196) $ (8,747)
Adjustments to reconcile net loss to net cash
(used in) provided by operating activities:
Depreciation and amortization 6,730 7,267
Loss on disposal of equipment -- 179
Share-based compensation 194 189
Deferred income taxes -- (5,780)
Changes in operating assets and liabilities:
Accounts receivable (2,814) (3,465)
Merchandise inventories (5,539) (15,573)
Prepaid expenses and other current assets 985 883
Income tax receivable 1,001 --
Accounts payable (1,377) 18,136
Salaries and wages payable 19 308
Other accrued expenses (4,143) 5,065
Deferred rent (274) 1,781
--------- --------
Net cash (used in) provided by operating
activities (9,414) 243
Investing activities
Purchase of fixed assets (361) (11,536)
--------- --------
Net cash used in investing activities (361) (11,536)
Financing activities
Proceeds from bank borrowing 188,794 77,309
Repayments of bank borrowing (178,810) (65,286)
Tax benefit on employee stock options -- 10
--------- --------
Net cash provided by financing activities 9,984 12,033
--------- --------
Increase in cash and cash equivalents 209 740
Cash and cash equivalents at beginning of
period 290 3,894
--------- --------
Cash and cash equivalents at end of period $ 499 $ 4,634
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Supplemental Disclosure of Cash Flow
Information
Cash paid during the period for:
Income taxes $ -- $ --
========= ========
Interest $ 1,291 $ 591
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