A vote of confidence by the nation's largest bank has boosted stock prices and invigorated new retail strategies for La Cañada Flintridge-based Sport Chalet, a publicly traded company that employs more than 3,000 people and operates 55 retail locations in three states.
The $65-million line of credit deal reached Oct. 21 with Bank of America provides increased borrowing flexibility for the company and lower interest rates that could save the retailer as much as $800,000 a year, according to company officials.
Stock prices shot up 23%, to $1.94 a share, following the announcement and nudged up another nickel Friday at the market's close.
Sport Chalet has been hit hard by the recession, posting a net income loss of $52 million in fiscal year 2009 following a $28 million drop in gross profits from the previous year, according to SEC filings. The company's shares once traded as high as $11 but fell as low as 16 cents in March 2009.
"We have renegotiated $25.4 million in occupancy costs and we're not done. Every single line-item expense you can imagine we've gone back and renegotiated on —shopping bags, utilities, cash-register receipts," CEO Craig Levra said of ongoing cost-cutting measures that so far this year have improved the company's bottom line.
Last quarter Sport Chalet posted operational losses that, at $1.2 million, were half what the company lost during the same 13-week period last year.
"Based on the progress that has been made over the past two years, we are happy to reaffirm our commitment to Sport Chalet," reads a statement by David Darnell, president of global commercial banking at Bank of America.
But tightening belts is only half the recipe for retail renaissance.
Levra said last week's credit deal gives the company the financial flexibility needed to respond to a changing marketplace.
Using community-level real estate and demographics data, Sport Chalet hopes to better match in-store retail offerings to customer needs in each neighborhood it serves.
The chain also is analyzing the viability of each of its locations and is considering whether new locations would be more effective in reaching customers, Levra said.
"We're micro-merchandizing each store," Levra explained. "What we're able to do…is determine two things: which merchandise categories to stand for in each store — what categories to emphasize, because every store behaves differently — and where each store should be located on a go-forward basis."
Founded in 1959 by La Cañada resident Norbert Olberz, Sport Chalet operates 43 stores in California, including its flagship location in the Town Center development.
The local store, which features a scuba training pool, employs 91 people and is about to begin temporary hires for the holiday season. The company employs about 100 at its corporate headquarters, located behind the store.
Levra declined to comment on sales figures or expected changes specific to any location.
"Our merchandise strategy is first-to-market with performance, tech and lifestyle merchandise," he said. "That's what our customers want from Sport Chalet, and that's not going to change."