Sport Chalet Improves Credit Agreement And Restructures Business Plan

Sport Chalet, Inc. has increased its credit line with Bank of America and is restructuring its sales and store location strategy, the La Canada-based company announced. The sporting goods retailer has renewed its agreement with Bank of America, increasing its credit line from $65 million to $45 million. The new agreement contains revised financial covenants and a reduced interest rate, which is expected to reduce the company’s interest expense by about $800,000 on an annualized basis. “The increased borrowing capacity provides us with tremendous flexibility to support our strategic initiatives and to enhance our vendor relationships,” said Craig Levra, the company’s CEO and chairman. Sport Chalet is also restructuring its business strategy to better align with the challenges of the economic environment. New planned steps include renegotiating rent on existing stores, deferring store openings, improving inventory management and reducing selling, general and administrative expenses. In order to achieve sales growth, the company has increased its online presence, growing its vendor brand shops and its product and service offerings while further expanding its Team Sales division. The company is also using new micro-merchandising strategies to more accurately reflect each store’s customer demographics, using the information for specialty concepts such as new running and triathlon shops. The company has engaged the services of Buxton, which provides market optimization analytics for the retail industry, to help evaluate each store and identify new location opportunities. “We are prepared to close underperforming stores and replace these locations with better sites in new and existing markets as real estate opportunities arise,” Levra said. The company is closing its Los Angeles store on La Cienega Boulevard, which will operate through February 2011. In 2008, the company opened another store on Olympic Boulevard in West Los Angeles as its first step in relocating the one that is closing. After the site on La Cienega Boulevard closes, employees at the location will be redeployed to other Sport Chalet stores.