After years of losses, Sport Chalet Inc. is hoping a newly hired financial adviser will deliver a win.
The La Cañada-Flintridge sporting goods retailer announced last week that it hired investment bank Cappello Capital Corp. of Santa Monica to explore deals.
That kind of announcement often means the company could be sold. But Alex Cappello, chairman and chief executive at Cappello, said an outright sale is not the company’s priority, although any offers would be brought to the board, of course.
Rather, he said Sport Chalet is considering a range of options aimed at raising capital to modernize stores and further build out the growing e-commerce site. Possibilities include a joint venture with a foreign partner or bringing in investments from a private equity firm or a manufacturer.
“A lot of people are interested in putting capital in,” said Capello. “We’ve had unsolicited, significant interest in the company.”
Sport Chalet, which has 52 stores in Arizona, California, Nevada and Utah, is hoping to turn around from hard times that were kicked off by the recession. The company’s last annual profit was in fiscal 2007. In its most recent quarter, it posted a loss of $2.8 million (-20 cents a share) on revenue of $82 million.
Capello approached Sport Chalet to work together and said the company is not in a hurry to make a deal. Sport Chalet has financing available for operations, but will need more to execute plans for modernizing and assure suppliers that it has sufficient capital. The company announced in its latest earnings report that it expanded its credit facility with Bank of America to $75 million from $65 million.
The retailer also noted in the earnings that online sales grew 38 percent compared with the same period last year. Sport Chalet also rolled out a same-day delivery service this year.
Other efforts at reinvention are on display at a new store in downtown L.A. retail center Figat7th, which has a smaller floor plan than other locations and features an Expert Center. The store, which opened in the summer, is organized by specific sporting activities, such as rock climbing. So, for example, climbing shoes aren’t in the shoe department on the opposite end of the store from other climbing gear.
Cappello said initial sales figures from the store are encouraging.
Sport Chalet Chief Executive Craig Levra said the company will update some of its current locations to fit a similar look and feel as the downtown store.
“It’s an extraordinary, exciting time,” Levra said. “We’ve changed the way shopping happens.”
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