LOS ANGELES (BRAIN) — Despite lackluster holiday sales due to unseasonably mild winter weather in the Western U.S., Sport Chalet’s fiscal third quarter was its most profitable quarter since 2007, the sporting goods chain reported Monday.
Net income for the three months ended Dec. 29, 2013, totaled $1.5 million, compared with a net loss of $1.9 million a year earlier. The result was driven primarily by higher gross margin and a reduction in promotional and labor expenses, the company said.
“Sales for the quarter began on an upswing in October and November, followed by a strong start to the holiday selling season as evidenced by our Black Friday Weekend and Cyber Monday sales,” said Craig Levra, Sport Chalet’s chairman and CEO. “Despite the strong start, winter weather did not materialize in our core Western markets and continues to present a challenge to our business. That said, I am proud of our team of experts for executing against a well-defined strategy to help mitigate poor winter conditions, and thus we were able to report our most profitable quarter in the past seven years.”
Sales for the quarter dipped 2.4 percent, or $2.3 million, to $95.3 million as the company closed three underperforming stores that contributed $2.4 million in the comparable quarter a year earlier. Same-store sales were off 1.3 percent.
The overall decline in sales was driven in part by an 11.9 percent sales decrease in the company’s Team Sales Division fueled by turnover in personnel, Levra noted. While acknowledging that team sales is a “business in transition,” Levra said the division’s slump should moderate as new reps establish school relationships. As a positive sign, he highlighted a just-completed deal for Sport Chalet to become the exclusive intercollegiate athletic supplier for California State University, Northridge — the company’s 28th so-called “all school” contract.
To address continued warm, dry winter weather in key Western markets, Sport Chalet is shifting its product mix and working with vendors to negotiate merchandise returns and new payment terms, Levra said.
With 51 stores in Arizona, California, Nevada and Utah, Sport Chalet sells bikes from brands including Haro, Electra, Diamondback, KHS, Pure Fix and Advance Sports International’s Fuji and SE Bikes. The company’s stores also provide bicycle service and car rack installation.
Sport Chalet is traded on the Nasdaq Stock Exchange under the symbol SPCHA. Its stock performance is tracked on BRAIN’s Industry Stock chart.
