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Tiffany Montgomery
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Sport Chalet narrows loss

Sport Chalet narrows loss
By Tiffany Montgomery
November 04, 2009 2:31 PM

Sport Chalet, an important retailer for the action sports industry, narrowed its loss in the second quarter ended Sept. 27.

The 55-store retailer recorded a $1.2 million loss vs. a $4.2 million loss in the same period last year.

Sales declined 7.9% to $88.8 million.

Same-store sales fell 12.4%.

The company reduced expenses during the period by $7.3 million by cutting salaries, advertising, professional fees, utilities, repairs and maintenance costs.

For the first half of its fiscal year, Sport Chalet said EBITDA was $4 million, more than the $0.8 million minimum required by its banking agreements.

Sport Chalet appears to saved itself from the brink of disaster with help from vendors and landlords and by internally revamping operations, cutting costs, and managing inventories more effectively.

CEO Craig Levra previously talked to Shop-eat-surf about the initiatives Sport Chalet has taken and how Bank of America is backing the retailer, one of the industry's largest customers.

Sport Chalet got into trouble last year, when it technically defaulted on a portion of its loan agreement with the bank. The bank increased restrictions and conditions on the company, including requiring that it hire a consultant to prepare cash flow and operating budgets.

Then in February, Sport Chalet announced it was reviewing its strategic options, and reported what Levra describes as "awful" third quarter results. The company recorded a $10.1 million loss excluding a non-cash charge and other accounting considerations. Including the charge, the company lost $32.4 million in the quarter.

Though the economy is still tough, Sport Chalet has managed to keep all 55 of its stores open.

 


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