Sport Chalet Plans Succession

LA CANADA, CA-The Sport Chalet retail chain has its eye on a smooth succession in management and to that end, along with reporting quarterly results this week, has proposed a plan of succession that would recapitalize the company by redistributing the shares of founder Norbert Olberz. The plan was outlined at a conference call this week, an unusual event for Sport Chalet because the company does not ordinarily conduct quarterly conference calls as many other publicly held retailers do.

Sport Chalet chairman and CEO Craig Levra explained the proposed recapitalization plan, which will go to the company’s stockholders at its annual meeting in September for approval. The conference call to outline the recapitalization proposal came on the same day that the company reported that earnings, sales and comparable store sales all increased for both the fiscal fourth quarter and the full year.

As explained by Levra, under the recapitalization plan Olberz would transfer approximately 973,000 shares of class B common stock to Levra and to Howard Kaminsky, the company’s CFO, which would give them approximately 45% of the combined voting interests of class B and class A common stock when added to the shares of Sport Chalet that they already own. Levra said that in addition to facilitating an orderly transition of control from Olberz to the company’s management, the recapitalization plan would increase the number of outstanding shares of Sport Chalet common stock and would accomplish a number of other financial objectives, such as reducing the volatility of the company’s shares.

For the fourth quarter ended March 31, Sport Chalet’s sales increased to $79.2 million from $69.4 million for the quarter ended March 31, 2004, with the company attributing the increase to the opening of five stores in fiscal 2005, plus a comparable store sales increase of 4.4%. Net income increased to $722,000, or 10 cents per share, from $330,000, or five cents per share, in the comparable quarter last year. For the year, Sport Chalet reported that it opened five new stores and posted earnings of $6.2 million, or 88 cents per share, up from $4.6 million, or 66 cents per share, in the previous year. Sales increased to $309.1 million from $264.2 million last year, with Sport Chalet attributing the increase to the five store openings this year and three last year, as well as a same-store sales increase of 5.7%. It attributed the same-store sales for both the quarter and the full year to better inventory assortments compared to the same period last year and increased customer traffic that resulted when harsh weather boosted sales of winter clothing.

Sport Chalet, which Olberz founded in 1959, operates 36 full-service specialty sporting goods stores in California and Southern Nevada that include merchandise and services for backpacking, canyoneering, and kayaking instruction, custom golf club fitting and repair, ski rental and repair, SCUBA training and certification, SCUBA boat charters, team sales, racquet stringing, and bicycle tune up and repair. One of the points of distinction that the company emphasizes is that it offers more than 40 services for serious sports enthusiasts in all of the activities for which it carries retail merchandise.