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Sport Chalet loss narrows as sales improve

For the three months that ended July 3, Sport Chalet reported a loss of $0.8 million, or 6 cents a share, compared with a loss of $1.9 million, or 14 cents, in the year-earlier period. Total sales rose 3.9% to $82.8 million, up from $79.7 million a year ago.

August 04, 2011|By Andrea Chang, Los Angeles Times
  • We promised our stockholders and we promised our board that irrespective of what happens externally, Sport Chalet will do better, CEO Craig Levra said.
We promised our stockholders and we promised our board that irrespective… (Gary Friedman, Los Angeles…)

Sport Chalet Inc. continued its slow turnaround in its fiscal first quarter, posting a narrow loss as sales improved in stores and online.

The La Canada Flintridge sporting goods chain has suffered a prolonged period of weakness in large part because its 55 stores are concentrated in economically battered markets. The recession also forced consumers to scale back on expensive discretionary purchases such as sports equipment.

But even as its stock price and sales plummeted in recent years, Chief Executive Craig Levra pledged to return the chain to profitability while keeping the company intact. To do so, Sport Chalet slashed its expenses, postponed new store openings, renegotiated rent on existing stores, worked to improve inventory management and laid off some workers.

It also took a risk by sticking with its high-quality brands during the downturn and resisting the dramatic price-slashing and deals that other retailers adopted to drive sales.

Those efforts appear to be gradually paying off. For the three months that ended July 3, the company reported a loss of $0.8 million, or 6 cents a share, compared with a loss of $1.9 million, or 14 cents, in the year-earlier period.

Total sales rose 3.9% to $82.8 million, up from $79.7 million a year ago. Sales at stores open at least a year rose 2.3%.

Sport Chalet has lately focused much of its efforts on building its website and growing online sales, which surged 66% year-over-year last quarter.

"We promised our stockholders and we promised our board that irrespective of what happens externally, Sport Chalet will do better," Levra said during an interview at the company's headquarters this week. "We can only control what we can control.... Our total focus is on continued improvement — get back to profitability and do it the right way."

But analysts say despite the uptick in business, Sport Chalet could face more challenges ahead.

"With the consumer showing signs of pulling in the reins yet again, things may take longer to get better," said Sean McGowan, an analyst at Needham & Co. "They have survived, but another deep recession that causes more reductions in consumer spending would strain the company's recovery."

Sport Chalet was founded by Norbert and Irene Olberz, who paid $4,000 for a tiny ski shop in La Canada in 1959. Norbert Olberz, who was no longer involved in the day-to-day operations of the company, died last month at age 86.

At the company's La Canada Flintridge store this week, several shoppers said they'd stuck with the company despite increasing competition from online sellers and stores such as REI, Big 5 Sporting Goods, Sports Authority and Dick's Sporting Goods.

"There's something about this place that I like, and it's definitely the service and selection," said Titina Folliero, 36, a restaurant owner from Eagle Rock who was shopping for baseball gear with her 8-year-old son, Matteo. "We came for one thing and we're leaving with a cartful of stuff because we like what we see."

Sport Chalet reported its earnings after the markets closed. On Wednesday, its Class A shares fell 8 cents, or 3.85%, to $1.95.

andrea.chang@latimes.com

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