Sport Chalet (SPCHA) Updates Progress on Initiatives to Improve Financial Performance

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June 29, 2009 4:33 PM EDT

Sport Chalet, Inc. (Nasdaq: SPCHA) (Nasdaq: SPCHB) announced that the Company has seen continued progress on its initiatives to improve its financial performance and return the Company to profitability.

Following a comprehensive review beginning in October 2008 of the Company's financial performance in light of the continued economic downturn in Sport Chalet's core markets (California, Nevada, Arizona, and Utah), the Company has taken a number of actions and implemented several corporate initiatives in an attempt to increase sales, improve operating performance, maximize shareholder value and position Sport Chalet for long-term growth.

The Company's initiatives to date include the following:

Amended loan agreement: On May 4, 2009, Sport Chalet amended its existing loan agreement with Bank of America, N.A. to increase financial flexibility.

Improved inventory management: Sport Chalet has implemented an aggressive inventory management program, which has led to historic lows of aged winter apparel and hardlines, along with footwear, general apparel, and other key categories of hardlines.

Renegotiated lease terms and agreements: The Company has approached landlords of all of its 55 stores, as well as of the corporate office, distribution center, and Team Sales division about restructuring lease terms.

Reduced expenses: Sport Chalet revised its store operating model by creating four models based on individual store performance, increasing the number of full-time versus part-time employees and freezing incentive and salary programs.

Launched enhanced ecommerce website: Sport Chalet successfully completed on-time and on-budget the launch of its new sportchalet.com website with enhanced capabilities on March 23, 2009.

Improved and expanded customer loyalty program: Despite the macro economic environment, the Company continued to aggressively move forward with its Sport Chalet Action Pass program, which was initiated in November 2007 to enhance the Company's customer relationship management capabilities.

"We believe our unwavering efforts and the progress we have made should improve the business and our profitability. Prior to the economic downturn, which began in 2007, Sport Chalet had been profitable for 11 consecutive years and 43 out of 44 quarters. We are confident that if we continue to execute our plan, we will be better positioned for sustainability, viability and positive results in the future."