Fitness financials: Sport Chalet reports Q4 earnings, plus Cybex, Crocs

Fitness financials: Sport Chalet reports Q4, FY 06 earnings results. Ryan Beck adjusts Cybex's earnings estimates. Crocs settles lawsuit with Shaka Holdings.
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Sport Chalet reports Q4, FY 06 earnings results
Late winter sales in the West helped push Sport Chalet's (Nasdaq: SPCHA and SPCHB) fourth-quarter sales up 13.3 percent

Sales for the quarter were $89.7 million from $79.2 million in the same period last year, with sales from four new stores contributing $5.7 million. Same-store sales for the quarter increased 5.7 percent -- excluding winter-related products sales were up 5.2 percent.

"While late winter weather in our region helped drive sales for the quarter, we also generated solid sales increases in our non-winter products which exemplifies our overall strategy of being less weather and geography dependent," said Craig Levra, chairman and CEO, in a statement.

Net income increased 126.9 percent to $1.6 million, or $0.12 per diluted share, compared to $722,000, or $0.05 per diluted share, for the fourth quarter last year.

Gross profit as a percent of sales decreased to 30.2 percent from 30.8 percent in the fourth quarter of last year. The 60 basis point decrease was primarily due to increased markdowns on winter-related merchandise, the retailer said. Selling, general and administrative expenses as a percent of sales improved by 230 basis points to 27.0 percent from 29.3 percent last year.

For the full year, Sport Chalet said sales increased 11.0 percent to $343.2 million from $309.1 million last year. Same-store sales increased 1.9 percent for the year after last year's 5.7 percent gain. Excluding winter-related products, same-store sales increased 3.3 percent, it said.

Net loss for fiscal 2006 was $87,000, or $0.01 per diluted share, including an after-tax charge of $7.8 million, or $0.56 per diluted share, related to recapitalization in the second quarter. Without the recapitalization, net income increased 25.6 percent in fiscal 2006 to $7.8 million, or $0.55 per diluted share, from $6.2 million, or $0.44 per diluted share, in fiscal 2005.

Gross profit as a percent of sales for the fiscal year was even at 30.9 percent. Selling, general and administrative expenses as a percent of sales were 29.6 percent, including $8.7 million related to the recapitalization in the second quarter. Excluding that, SG&A expenses as a percent of sales was 27.1 percent in fiscal 2006, compared to 27.5 percent in fiscal 2005.

Four new stores were opened in fiscal 2006 compared to five new stores opened in fiscal 2005.

Ryan Beck adjusts Cybex's earnings estimates
In light of Cybex International's (AMEX: CYB) recently completed offering, Ryan Beck & Co. brokerage said it had adjusted the company's earnings estimates slightly lower, but maintained its $8 price target.

For FY06 and FY07, EPS estimates were lowered to $0.43 and $0.57 from $0.45 and $0.60 to reflect the higher number of shares outstanding following Cybex's recently completed offering and the anticipated $2.5 million judgment payment in the third quarter, Ryan Beck said in a research note.

Analyst Mark Rupe added, "Our $8 price target is based on 13.5x our FY07 EPS estimate, which is inline with its peer group." It also gave Cybex an "Outperform" rating.

Crocs settles lawsuit with Shaka Holdings
Last week, Crocs (Nasdaq: CROX) settled a patent infringement lawsuit with Acme EX-IM, and has followed up this week with another settlement against Shaka Holdings for an undisclosed sum.

The lawsuit charged Shaka with infringing Crocs' U.S. patents and trade dress. The lawsuit was pending in federal court in Colorado, while an administrative action pending in the International Trade Commission alleged unfair acts related to the importation of infringing footwear.

As part of the settlement, Shaka has agreed to not infringe Crocs' patents in the future, and Crocs has released Shaka and its customers of any past liability.

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