SPCH Sport Chalet (MM)

LOS ANGELES, Aug. 11 /PRNewswire-FirstCall/ -- Sport Chalet, Inc. (NASDAQ:SPCH) today announced the results for its first quarter of fiscal 2006 ended June 30, 2005. Sales increased 17.2% from $61.5 million for the quarter ended June 30, 2004 to $72.1 million for the same quarter this year. The increase is the result of opening five new stores as well as a same store sales increase of 4.9%. The same store sales increase is primarily due to strong performance in the footwear category compared to the same quarter last year. Gross margin increased from 28.9% for the quarter ended June 30, 2004 to 29.5% for the same quarter this year, primarily due to the increase in same store sales which reduced the need for markdowns. Selling, general and administrative expenses, as a percentage of sales, increased slightly from 28.4% for the three months ended June 30, 2004 to 28.6% for the same period this year. This is primarily a result of increased litigation reserves and infrastructure consulting fees, partially offset by the efficiencies from the increase in same store sales and a gain from an insurance reimbursement for a store damaged in 2004. Net income increased $252,000, or 183.9% from $137,000, or $0.02 per diluted share for the quarter ended June 30, 2004, to $389,000, or $0.06 per diluted share for the same quarter this year. Commenting on the results, Craig Levra, Chairman and CEO, said, "We are extremely pleased to sustain the momentum from fiscal 2005 to a strong first quarter in fiscal 2006. We continue to benefit from the strategic initiatives we put in place in the past few years, as reflected in our financial performance as gross margin improved 60 basis points. As we move forward, we will remain focused on continuing to enhance our operating platform and believe we are well positioned to maintain our performance in the second quarter of fiscal 2006." 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 and Southern Nevada. The Company offers over 40 services for the serious sports enthusiast, including backpacking, canyoneering, and kayaking instruction, custom golf club fitting and repair, ski rental and repair, SCUBA training and certification, SCUBA boat charters, team sales, racquet stringing, and bicycle tune up and repair throughout its current 36 locations. The address for Sport Chalet's web site is http://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. 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 competitive environment in the sporting goods industry in general and in the Company's specific market areas, inflation, the challenge of implementing the Company's expansion plans and 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. SPORT CHALET, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME Three months ended June 30, 2005 2004 Net sales $72,192,395 $61,621,119 Cost of goods sold, buying and occupancy costs 50,888,759 43,852,789 Gross profit 21,303,636 17,768,330 Selling, general and administrative expenses 20,648,405 17,486,345 Income from operations 655,231 281,985 Interest expense (1,887) (43,291) Income before taxes 653,344 238,694 Income tax provision 264,000 101,865 Net income $389,344 $136,829 Earnings per share: Basic $0.06 $0.02 Diluted $0.06 $0.02 Weighted average number of common shares outstanding: Basic 6,686,368 6,673,534 Diluted 7,048,155 7,190,852 SPORT CHALET, INC. CONDENSED CONSOLIDATED BALANCE SHEETS June 30, March 31, 2005 2005 (Unaudited) Assets Current assets: Cash $6,766,839 $6,176,689 Accounts receivable, less allowance of $189,000 at June 30, 2005 and $182,000 at March 31, 2005 1,883,706 1,462,042 Merchandise inventories 71,701,609 65,061,142 Prepaid expenses and other current assets 3,153,464 3,044,153 Refundable income tax 3,800 -- Deferred income taxes 3,410,792 3,915,079 Total current assets 86,920,210 79,659,105 Furniture, equipment and leasehold improvements - net 38,298,115 37,502,578 Deferred income taxes 1,977,847 1,550,753 Other assets -- 76,960 Total assets $127,196,172 $118,789,396 Liabilities and stockholders' equity Current liabilities: Accounts payable $30,041,143 $20,883,973 Salaries and wages payable 4,450,833 5,080,320 Income taxes payable -- 825,059 Other accrued expenses 10,252,486 9,753,575 Total current liabilities 44,744,462 36,542,927 Deferred rent 12,936,535 13,136,303 Stockholders' equity Preferred stock, $.01 par value: Authorized shares - 2,000,000 Issued and outstanding shares - none -- -- Common stock, $.01 par value: Authorized shares - 15,000,000 Issued and outstanding shares - 6,686,368 at June 30, 2005 and at March 31, 2005 66,864 66,864 Additional paid-in capital 22,975,044 22,959,379 Retained earnings 46,473,267 46,083,923 Total stockholders' equity 69,515,175 69,110,166 Total liabilities and stockholders' equity $127,196,172 $118,789,396 SPORT CHALET, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Three months ended June 30, 2005 2004 Operating activities Net income $389,344 $136,829 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 2,193,861 1,949,882 Loss on disposal of furniture, equipment and leasehold improvements 188,806 -- Deferred income taxes 77,193 (570,760) Tax benefit on employee stock options 15,665 41,928 Changes in operating assets and liabilities: Accounts receivable (421,664) 143,156 Merchandise inventories (6,640,467) (10,349,835) Prepaid expenses and other current assets (109,311) (276,890) Refundable income taxes (3,800) -- Accounts payable 9,157,170 8,335,152 Salaries and wages payable (629,487) (6,799) Income taxes payable (825,059) 330,697 Other accrued expenses 498,911 618,980 Deferred rent (199,768) 178,112 Net cash provided by operating activities 3,691,394 530,452 Investing activities Purchase of furniture, equipment and leasehold improvements (3,178,204) (2,079,179) Other assets 76,960 8,017 Net cash used in investing activities (3,101,244) (2,071,162) Increase in cash and cash equivalents 590,150 (1,540,710) Cash and cash equivalents at beginning of period 6,176,689 3,071,648 Cash and cash equivalents at end of period $6,766,839 $1,530,938 Supplemental Disclosure of Cash Flow Information Cash paid during the period for: Income taxes $1,000,000 $300,000 Interest 41,587 -- DATASOURCE: Sport Chalet, Inc. CONTACT: Howard Kaminsky, Exec. VP-CFO of Sport Chalet, Inc., +1-818-949-5386; or Investors, Cara O'Brien, +1-212-850-5669, or Media, Melissa Merrill, +1-212-850-5651, both of Financial Dynamics for Sport Chalet, Inc. Web site: http://www.sportchalet.com/

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