Sport Chalet, Inc. is reporting a 2.8 percent sales decrease in its first quarter, which ended June 30, compared to the same period last year. Sales came in at $81.5 million, down from $83.8 million last year. The company's net loss for the first quarter was $2.8 million, compared to a net income of $0.1 million last year.?
"Our first quarter sales were lower than expected, which was disappointing following the positive momentum we experienced at the end of fiscal 2013," said Craig Levra, Sport Chalet chairman and CEO. "We are closely monitoring the uneven retail environment and will continue to respond as appropriate with promotional activities, including radio advertising and Action Pass member outreach."
A loss of $1.1 million in sales due to the closure of two underperforming stores, a 31 percent sales decrease from a loss of sales representatives and a 0.7 percent decrease in comparable store sales were all factors that contributed to lower sales in Q1. But, declines were offset by a 37.6 percent increase in online sales.??
The decrease in comparable store sales reflects a weaker than expected retail sales environment, to which Sports Chalet responded by increasing promotions to spur sales. The move impacted the company's gross margin though, which fell to 26.3 percent from 27.9 percent in the first quarter of last year.
Sport Chalet also recently amended its credit facility with Bank of America, N.A., increasing its previous $65 million credit to $75 million. The expanded credit facility allows the company to borrow on more favorable terms and conditions and take advantage of better interest rates, as well as an extended expiration date of August 2018.?
Looking ahead, Sport Chalet plans to reduce expenses and improve inventory management. They'll also continue to improve inventory systems by tailoring merchandise to cater to local markets, while aggressively managing inventory at store and vendor levels.?
"We have taken significant costs out of our business and continue to evaluate opportunities to reduce our cost structure in a targeted and prudent manner. With our expanded, five-year $75.0 million credit facility, we have ample resources to execute our plan," said Levra. When our customers return in full-force, we expect that the operating leverage we have built into our business model, and the strategic initiatives we are implementing, will result in improved financial performance."
With 54 stores in Arizona, California, Nevada and Utah, Sport Chalet sells bikes from brands including Haro, Electra, Diamondback,?KHS, Pure Fix?and ASI's Fuji and SE Bikes. The company's stores also provide bicycle service and car rack installation.?
Sports Chalet is traded on the NASDAQ Stock Exchange under the symbol SPCHA. Its stock performance is tracked on?BRAIN's Industry Stock chart.
