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Sport Chalet Shows It Can Get Fiscal

California: News and Insight on Business in the Golden
State

Sporting goods: The company posts record sales and profit for last year as efforts to turn things around begin to pay off.

June 03, 1998|STEPHEN GREGORY | SPECIAL TO THE TIMES

Capping years of efforts to turn itself around, La Canada-based Sport Chalet Inc. said Tuesday that it logged record profit in its latest fiscal year.

With longtime employees gathered outside the company's flagship store at the foot of Angeles Crest Highway, officials announced that the sporting goods chain recorded $143 million in sales and $3.2 million in net income, both company milestones, during the 12 months ended March 31.

It was welcome news for investors in the family-controlled chain, which, since going public in 1992, has struggled to expand, suffered a pair of high-profile management shake-ups and posted a loss of $1.4 million two years ago.

Since then, however, the company has rung up eight straight profitable quarters. Wall Street responded to the news Tuesday by sending Sport Chalet stock to a five-year high. Shares closed at $6 on Nasdaq, up 69 cents. The company has yet to match the share price of $9.50 it posted a day after going public.

Tuesday's announcement was also good news for 109 of the company's 1,300 employees, who learned amid the balloons and fanfare that as a group they will be given $1.5 million in stock by company founder and Chairman Norbert Olberz.

Only managers and employees with at least 10 years with the company were eligible for the gift, which was divided according to seniority and position.

Company officials made sure the news media knew of the "surprise" gift a day before the announcement. Still, beneficiaries interviewed Tuesday said they were genuinely surprised.

"We thought maybe they were going to announce the opening of a new store or something," said Tom Ishkanian, an 18-year floor salesman. "It really came as quite a surprise."

Los Angeles securities broker Ed Wedbush, whose company took Sport Chalet public, said Tuesday's news could be a sign the chain is finally coming into its own.

"We're impressed by their turnaround," he said. "They fell on difficult times and they've fought back."

The company, which operates 18 stores from Ventura to San Diego counties, had hoped to have at least 25 stores open by the end of March, but the recession and other problems hampered those plans.

In the last few years, profit margins for all sporting goods chains have been thin or nonexistent because of fierce competition, Wedbush said. "It's been pretty tough," he said.

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