Los Angeles, California — (November 3, 2003) – Sport Chalet, Inc. (Nasdaq: SPCH) announced the results for its second quarter ended September 30, 2003. Sales for the period increased from $56.3 million last year to $61.8 million this year, a 9.8% increase. The increase is the result of opening two stores in late November 2002, aided by a same store sales increase of 3.7%. The gross profit margin increased to 29.9%, compared to 29.8% in the second quarter of last year, as a result of the Company’s continued focus on inventory management which yielded lower markdowns. Selling, general and administrative expenses, as a percentage of sales, decreased from 25.5% for the three months ended September 30, 2002, to 25.2% for the same period this year primarily a result of higher same store sales. As a result, net income increased 22.0% from $1.4 million, or $0.20 per diluted share, in the second quarter last year to $1.7 million, or $0.25 per diluted share.
During the six months ended September 30, 2003, sales increased from $107.5 million last year to $115.1 million this year, a 7.1% increase. The increase is a result of opening two stores in late November 2002, aided by a same store sales increase of 1.0%. The gross profit margin increased 50 basis points from 28.4% for the six months ended September 30, 2002, to 28.9% for the same period this year due to lower markdowns as a result of the Company’s focus on improved inventory procurement and administration. Selling, general and administrative expenses, as a percentage of sales, increased from 26.0% for the six months ended September 30, 2002, to 27.2% for the same quarter this year as a result of higher advertising expense attributed to the timing of vendor reimbursements and the write-down of undepreciated assets resulting from two large scale remodels in the first quarter. Consequently, net income decreased from $1.5 million, or $0.22 per diluted share, for the six months ended September 30, 2002, to $1.1 million, or $0.16 per diluted share, for the same period this year.
In addition to the previously announced three new locations opening this fall, the Company has committed to three additional locations set to open in fiscal 2004/2005. The Company’s expansion to Northern California will continue next year with new locations in the Sacramento communities of Roseville and Elk Grove. The third opening, located in Arcadia will further strengthen the Company in its primary Southern California market. To support continued growth the Company has made two executive promotions. Jeff Lichtenstein, a 14 year veteran of the Company, has been promoted to Senior Vice President of Risk Management and Value Added Services and Tim Anderson has been promoted to Vice President of Store Operations.
Commenting on the results, Craig Levra, Chairman and CEO said, “This quarter’s results are a great improvement over the challenges we faced in the first quarter. I am pleased that our strategic focus provided greater gross profits and with continued efforts placed on leveraging overhead we will be able to maximize our bottom-line.” Mr. Levra continued, “I am very excited about our continuing expansion plans. With the addition of the Roseville and Elk Grove sites, combined with the Antioch and Central Sacramento locations opening this fall, we will begin to build synergies of distribution and marketing, just as we have in our Southern California market.”
Sport Chalet, founded in 1959, is a leading operator of full service specialty sporting goods superstores in Southern California and Southern Nevada. The Company offers over 35 services for the serious sports enthusiast, including custom golf club fitting and repair, ski rental and repair, SCUBA training and certification, dive charters, team sales, racquet stringing, and bicycle tune up and repair throughout its current 28 locations. The address for Sport Chalet’s web site is www.sportchalet.com.