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Sport Chalet results paint bleak picture for industry retailer

By Tiffany Montgomery
February 12, 2009 7:22 AM

Sport Chalet total sales declined 10 percent to $104.6 million in the quarter ended Dec. 28, and same-store sales fell 15.4 percent, the company said in results released yesterday that painted a dire picture for the retailer.

Sport Chalet, an important industry customer with 55 stores, recorded a $10.1 million loss excluding a non-cash charge and other accounting considerations of $22.3 million.
Including the charge, the company lost $32.4 million in the quarter.

Increased promotions, higher rent for newer stores and the action pass promotion led to gross profit declining to 22.3 percent of sales vs. 30.2 percent the same quarter last year.

Sport Chalet's sales have been soft for awhile. According to its quarterly report filed with the SEC, same-store sales have been negative for the past five quarters. The company's stores are in California, Nevada, Arizona and Utah, some of the states hardest hit by the downturn in housing.

In the current quarter through Feb. 8, same-store sales are down 21 percent. If current sales trends continue, the company said it may have insufficient working capital to operate.

The company has cut costs by reducing store labor, corporate overhead and advertising expenses. Sport Chalet is also renegotiating rents with landlords.

Sport Chalet previously announced it was reviewing "strategic alternatives," including raising more capital, amending bank credit lines and reducing spending further.