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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934. FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2002

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934. FOR THE TRANSITION PERIOD FROM      TO

Commission File Number: 0-20736

Sport Chalet, Inc.

(Exact name of registrant as specified in its charter)


|                                                                            |  |                                                
|--------------------------------------------------------------------------- |  | -----------------------------------------------
|Delaware
(State or other jurisdiction of
incorporation or organization)     |  | 95-4390071
(I.R.S. Employer Identification No.)
|                                                                            |  |                                                
|839 Houseman Street, La Canada, CA
(Address of principal executive offices) |  | 91011
(Zip Code)                               
|                                                                            |  |                                                
|(818) 790-2717
(Registrants telephone number, including area code)         |  |                                                

Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

|        |  |       
|------- |  | ------
|Yes [X] |  | No [_]

Number of shares outstanding of the registrants common stock as of December
31, 2002: 6,618,334





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TABLE OF CONTENTS



|                                 |                                                                                                |                                    |  |  |  |  |  | 
|-------------------------------- | ---------------------------------------------------------------------------------------------- | ---------------------------------- |  |  |  |  |  | 
|Part I  FINANCIAL INFORMATION  
|                                 | Item 1. Financial Statements.                                                                 
|                                 |                                                                                                | CONDENSED STATEMENTS OF INCOME    
|                                 |                                                                                                | CONDENSED BALANCE SHEETS          
|                                 |                                                                                                | CONDENSED STATEMENTS OF CASH FLOWS
|                                 |                                                                                                | NOTES TO FINANCIAL STATEMENTS     
|                                 | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
|                                 | Item 3. Quantitative and Qualitative Disclosures About Market Risk                            
|Item 4. Controls and Procedures.
|Part II  OTHER INFORMATION     
|                                 | Item 1. Legal Proceedings.                                                                    
|                                 | Item 2. Changes in Securities and Use of Proceeds.                                            
|                                 | Item 3. Defaults Upon Senior Securities.                                                      
|                                 | Item 4. Submission of Matters to a Vote of Securities Holders.                                
|                                 | Item 5. Other Information.                                                                    
|                                 | Item 6. Exhibits and Reports on Form 8-K.                                                     
|SIGNATURE                       
|Ex-10.1                         
|Ex-10.2                         
|Ex-10.3                         
|Ex-10.4                         
|Ex-99.1                         



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SPORT CHALET, INC.

Index to Form 10-Q

|        |  |                                                                                       |  |      |                                |                             |  |  |  | 
|------- |  | ------------------------------------------------------------------------------------- |  | ---- | ------------------------------ | --------------------------- |  |  |  | 
|        |  |                                                                                       |  | Page |                                |                             |  | 
|        |  |                                                                                       |  |      |                                |                             |  | 
|        |  |                                                                                       |  |      | PART I  FINANCIAL INFORMATION |                             |  |  | 
|Item 1. |  | Financial Statements                                                                  |  |      | 3                              |                            
|Item 2. |  | Managements Discussion and Analysis of Financial Condition
and Results of Operations |  |      | 8                              |                            
|Item 3. |  | Quantitative and Qualitative Disclosures About Market Risk                            |  |      | 14                             |                            
|Item 4. |  | Controls and Procedures                                                               |  |      | 14                             |                            
|        |  |                                                                                       |  |      |                                | PART II  OTHER INFORMATION |  |  |  | 
|Item 1. |  | Legal Proceedings                                                                     |  |      | 15                             |                            
|Item 2. |  | Changes in Securities and Use of Proceeds                                             |  |      | 15                             |                            
|Item 3. |  | Defaults Upon Senior Securities                                                       |  |      | 15                             |                            
|Item 4. |  | Submission of Matters to a Vote of Securities Holders                                 |  |      | 15                             |                            
|Item 5. |  | Other Information                                                                     |  |      | 15                             |                            
|Item 6. |  | Exhibits and Reports on Form 8-K                                                      |  |      | 16                             |                            

2



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Part I  FINANCIAL INFORMATION




Item 1. Financial Statements.




SPORT CHALET, INC.

CONDENSED STATEMENTS OF INCOME
(UNAUDITED)

|                                                      |         |   |                    |           |                   |   |            |           |      |   |             |           |  |   |             |           | 
|----------------------------------------------------- | ------- | - | ------------------ | --------- | ----------------- | - | ---------- | --------- | ---- | - | ----------- | --------- |  | - | ----------- | --------- | 
|                                                      |         |   | Three months ended |           | Nine months ended
|                                                      |         |   | December 31,       |           | December 31,     
|                                                      |         |   |                    |           |                  
|                                                      |         |   | 2002               |           | 2001              |   | 2002       |           | 2001
|                                                      |         |   |                    |           |                   |   |            |           |     
|Net sales                                             |         | $ | 72,271,486         |           |                   | $ | 67,429,014 |           |      | $ | 179,803,490 |           |  | $ | 170,036,590 |          
|Cost of goods sold, buying and
occupancy              |         |   | 49,627,384         |           |                   |   | 47,885,312 |           |      |   | 126,592,231 |           |  |   | 119,851,914 |          
|                                                      |         |   |                    |           |                   |   |            |           |      |   |             |           |  |   |             |          
|Gross profit                                          |         |   | 22,644,102         |           |                   |   | 19,543,702 |           |      |   | 53,211,259  |           |  |   | 50,184,676  |          
|Selling, general and administrative
expenses          |         |   | 18,292,489         |           |                   |   | 15,776,963 |           |      |   | 46,232,790  |           |  |   | 42,141,788  |          
|                                                      |         |   |                    |           |                   |   |            |           |      |   |             |           |  |   |             |          
|Income from operations                                |         |   | 4,351,613          |           |                   |   | 3,766,739  |           |      |   | 6,978,469   |           |  |   | 8,042,888   |          
|Interest expense                                      |         |   | (147,858           | )         |                   |   | (100,751   | )         |      |   | (272,385    | )         |  |   | (30,223     | )        
|                                                      |         |   |                    |           |                   |   |            |           |      |   |             |           |  |   |             |          
|Income before taxes                                   |         |   | 4,203,755          |           |                   |   | 3,665,988  |           |      |   | 6,706,084   |           |  |   | 8,012,665   |          
|Income tax provision                                  |         |   | 1,598,000          |           |                   |   | 1,481,000  |           |      |   | 2,599,000   |           |  |   | 3,221,000   |          
|                                                      |         |   |                    |           |                   |   |            |           |      |   |             |           |  |   |             |          
|Net income                                            |         | $ | 2,605,755          |           |                   | $ | 2,184,988  |           |      | $ | 4,107,084   |           |  | $ | 4,791,665   |          
|                                                      |         |   |                    |           |                   |   |            |           |      |   |             |           |  |   |             |          
|Earnings per share:                                   |         |   |                    |           |                   |   |            |           |      |   |             |           |  |   |             |          
|                                                      | Basic   |   | $                  | 0.39      |                   |   | $          | 0.33      |      |   | $           | 0.62      |  |   | $           | 0.73      | 
|                                                      |         |   |                    |           |                   |   |            |           |      |   |             |           |  |   |             |          
|                                                      | Diluted |   | $                  | 0.38      |                   |   | $          | 0.31      |      |   | $           | 0.59      |  |   | $           | 0.68      | 
|                                                      |         |   |                    |           |                   |   |            |           |      |   |             |           |  |   |             |          
|Weighted average number of
common shares outstanding: |         |   |                    |           |                   |   |            |           |      |   |             |           |  |   |             |          
|                                                      | Basic   |   |                    | 6,618,334 |                   |   |            | 6,589,834 |      |   |             | 6,613,315 |  |   |             | 6,585,982 | 
|                                                      |         |   |                    |           |                   |   |            |           |      |   |             |           |  |   |             |          
|                                                      | Diluted |   |                    | 6,910,809 |                   |   |            | 7,019,281 |      |   |             | 6,952,949 |  |   |             | 7,007,671 | 
|                                                      |         |   |                    |           |                   |   |            |           |      |   |             |           |  |   |             |          

See accompanying notes.

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SPORT CHALET, INC.

CONDENSED BALANCE SHEETS

|                                                    |                                                |                                                                                                                               |            |              |             |           |            |            |            | 
|--------------------------------------------------- | ---------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------- | ---------- | ------------ | ----------- | --------- | ---------- | ---------- | ---------- | 
|                                                    |                                                |                                                                                                                               |            | December 31, |             | March 31,
|                                                    |                                                |                                                                                                                               |            | 2002         |             | 2002     
|                                                    |                                                |                                                                                                                               |            |              |             |          
|                                                    |                                                |                                                                                                                               |            | (Unaudited)  |             |           |            |           
|Assets                                              |                                                |                                                                                                                               |            |              |             |           |            |           
|Current assets:                                     |                                                |                                                                                                                               |            |              |             |           |            |           
|                                                    | Cash                                           |                                                                                                                               | $          | 7,795,251    |             |           | $          | 4,273,485  |           
|                                                    | Accounts receivable, less allowance of $25,000 |                                                                                                                               |            | 1,955,971    |             |           |            | 678,709    |           
|                                                    | Merchandise inventories                        |                                                                                                                               |            | 62,938,020   |             |           |            | 47,916,553 |           
|                                                    | Prepaid expenses and other current assets      |                                                                                                                               |            | 1,824,210    |             |           |            | 1,757,007  |           
|                                                    | Prepaid income taxes                           |                                                                                                                               |            |             |             |           |            | 448,760    |           
|                                                    | Deferred income taxes                          |                                                                                                                               |            | 1,135,583    |             |           |            | 1,258,795  |           
|                                                    |                                                |                                                                                                                               |            |              |             |           |            |           
|                                                    |                                                | Total current assets                                                                                                          |            |              | 75,649,035  |           |            |            | 56,333,309 | 
|Furniture, equipment and leasehold improvements-net |                                                |                                                                                                                               | 27,585,354 |              |             |           | 26,577,041 |           
|Deferred income taxes                               |                                                |                                                                                                                               |           |              |             |           | 184,492    |           
|Other assets                                        |                                                |                                                                                                                               | 117,224    |              |             |           | 215,468    |           
|                                                    |                                                |                                                                                                                               |            |              |             |           |            |           
|                                                    |                                                | Total assets                                                                                                                  |            | $            | 103,351,613 |           |            | $          | 83,310,310 | 
|                                                    |                                                |                                                                                                                               |            |              |             |           |            |           
|Liabilities and stockholders equity                |                                                |                                                                                                                               |            |              |             |           |            |           
|Current liabilities:                                |                                                |                                                                                                                               |            |              |             |           |            |           
|                                                    | Bank overdraft                                 |                                                                                                                               | $          | 6,493,961    |             |           | $          | 7,192,258  |           
|                                                    | Accounts payable                               |                                                                                                                               |            | 19,018,567   |             |           |            | 10,815,241 |           
|                                                    | Salaries and wages payable                     |                                                                                                                               |            | 3,493,830    |             |           |            | 2,184,509  |           
|                                                    | Other accrued expenses                         |                                                                                                                               |            | 9,289,962    |             |           |            | 4,008,208  |           
|                                                    | Income taxes payable                           |                                                                                                                               |            | 554,795      |             |           |            |           |           
|                                                    |                                                |                                                                                                                               |            |              |             |           |            |           
|                                                    |                                                | Total current liabilities                                                                                                     |            |              | 38,851,115  |           |            |            | 24,200,216 | 
|Deferred rent                                       |                                                |                                                                                                                               | 4,628,098  |              |             |           | 4,185,625  |           
|Deferred income taxes                               |                                                |                                                                                                                               | 707,652    |              |             |           |           |           
|Stockholders equity                                |                                                |                                                                                                                               |            |              |             |           |            |           
|                                                    | Preferred stock, $.01 par value:               |                                                                                                                               |            |              |             |           |            |            |           
|                                                    |                                                | Authorized shares - 2,000,000
Issued and outstanding shares  none                                                            |            |              |            |           |            |            |           | 
|                                                    | Common stock, $.01 par value:                  |                                                                                                                               |            |              |             |           |            |            |           
|                                                    |                                                | Authorized shares - 15,000,000
Issued and outstanding shares  6,618,334
at December 31, 2002 and 6,595,500
at March 31, 2002 |            |              | 66,183      |           |            |            | 65,955     | 
|                                                    | Additional paid-in capital                     |                                                                                                                               |            | 22,065,584   |             |           |            | 21,932,617 |           
|                                                    | Retained earnings                              |                                                                                                                               |            | 37,032,981   |             |           |            | 32,925,897 |           
|                                                    |                                                |                                                                                                                               |            |              |             |           |            |           
|                                                    | Total stockholders equity                     |                                                                                                                               |            | 59,164,748   |             |           |            | 54,924,469 |           
|                                                    |                                                |                                                                                                                               |            |              |             |           |            |           
|                                                    |                                                | Total liabilities and stockholders equity                                                                                    |            | $            | 103,351,613 |           |            | $          | 83,310,310 | 
|                                                    |                                                |                                                                                                                               |            |              |             |           |            |           

See accompanying notes.

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SPORT CHALET, INC.

CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)

|                                                                                  |                                              |                                           |             |                                |             |      |             |           |             |  
|--------------------------------------------------------------------------------- | -------------------------------------------- | ----------------------------------------- | ----------- | ------------------------------ | ----------- | ---- | ----------- | --------- | ----------- | -
|                                                                                  |                                              |                                           |             | Nine months ended December 31,
|                                                                                  |                                              |                                           |             |                               
|                                                                                  |                                              |                                           |             | 2002                           |             | 2001
|                                                                                  |                                              |                                           |             |                                |             |     
|Operating activities                                                              |                                              |                                           |             |                                |             |      |             |          
|Net income                                                                        |                                              | $                                         | 4,107,084   |                                |             | $    | 4,791,665   |          
|Adjustments to reconcile net income to net cash provided
by operating activities: |                                              |                                           |             |                                |             |      |             |          
|                                                                                  | Depreciation and amortization                |                                           |             | 4,206,878                      |             |      |             | 3,947,000 |            
|                                                                                  | Loss on disposal of equipment                |                                           |             | 30,235                         |             |      |             |          |            
|                                                                                  | Deferred income taxes                        |                                           |             | 1,015,356                      |             |      |             | 529,141   |            
|                                                                                  | Tax benefit on employee stock options        |                                           |             | 45,087                         |             |      |             | 0         |            
|                                                                                  | Changes in operating assets and liabilities: |                                           |             |                                |             |      |             |           |            
|                                                                                  |                                              | Accounts receivable                       |             |                                | (1,277,262  | )    |             |           | (975,785    | )
|                                                                                  |                                              | Merchandise inventories                   |             |                                | (15,021,467 | )    |             |           | (16,953,042 | )
|                                                                                  |                                              | Refundable (prepaid) income taxes         |             |                                | 448,760     |      |             |           | (408,798    | )
|                                                                                  |                                              | Prepaid expenses and other current assets |             |                                | (67,203     | )    |             |           | (604,624    | )
|                                                                                  |                                              | Bank overdraft                            |             |                                | (698,297    | )    |             |           |            |  
|                                                                                  |                                              | Accounts payable                          |             |                                | 8,203,326   |      |             |           | 14,621,702  |  
|                                                                                  |                                              | Salaries and wages payable                |             |                                | 1,309,321   |      |             |           | (97,697     | )
|                                                                                  |                                              | Other accrued expenses                    |             |                                | 5,281,754   |      |             |           | 2,428,238   |  
|                                                                                  |                                              | Income taxes payable                      |             |                                | 554,795     |      |             |           | (1,286,861  | )
|                                                                                  |                                              | Deferred rent                             |             |                                | 442,473     |      |             |           | 166,222     |  
|                                                                                  |                                              |                                           |             |                                |             |      |             |          
|Net cash provided by operating activities                                         |                                              |                                           | 8,580,840   |                                |             |      | 6,157,161   |          
|Investing activities                                                              |                                              |                                           |             |                                |             |      |             |          
|Other assets                                                                      |                                              |                                           | 98,244      |                                |             |      | 37,643      |          
|Purchase of furniture, equipment and leasehold improvements                       |                                              |                                           | (5,245,426  | )                              |             |      | (10,230,086 | )        
|                                                                                  |                                              |                                           |             |                                |             |      |             |          
|Net cash used in investing activities                                             |                                              |                                           | (5,147,182  | )                              |             |      | (10,192,443 | )        
|Financing activities                                                              |                                              |                                           |             |                                |             |      |             |          
|Proceeds from bank borrowing                                                      |                                              |                                           | 53,523,424  |                                |             |      | 10,000,000  |          
|Repayments of bank borrowing                                                      |                                              |                                           | (53,523,424 | )                              |             |      | (10,000,000 | )        
|Proceeds from exercise of stock options                                           |                                              |                                           | 88,108      |                                |             |      | 44,352      |          
|                                                                                  |                                              |                                           |             |                                |             |      |             |          
|Net cash provided by financing activities                                         |                                              |                                           | 88,108      |                                |             |      | 44,352      |          
|                                                                                  |                                              |                                           |             |                                |             |      |             |          
|Increase (decrease) in cash and cash equivalents                                  |                                              |                                           | 3,521,766   |                                |             |      | (3,990,930  | )        
|Cash and cash equivalents at beginning of period                                  |                                              |                                           | 4,273,485   |                                |             |      | 8,945,034   |          
|                                                                                  |                                              |                                           |             |                                |             |      |             |          
|Cash and cash equivalents at end of period                                        |                                              | $                                         | 7,795,251   |                                |             | $    | 4,954,104   |          
|                                                                                  |                                              |                                           |             |                                |             |      |             |          
|Supplemental Disclosure of Cash Flow Information                                  |                                              |                                           |             |                                |             |      |             |          
|Cash paid during the period for:                                                  |                                              |                                           |             |                                |             |      |             |          
|                                                                                  |                                              | Income taxes                              |             | $                              | 535,000     |      |             | $         | 4,587,516   |  
|                                                                                  |                                              | Interest                                  |             |                                | 157,203     |      |             |           | 68,194      |  

See accompanying notes.

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SPORT CHALET, INC.

NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)



|1. |  | Basis of Presentation
|-- |  | ---------------------

The accompanying unaudited financial statements have been prepared in
accordance with accounting principles generally accepted in the United States
for interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all information
and footnotes required by accounting principles generally accepted in the
United States for complete financial statements. In the opinion of management,
all adjustments, consisting of normal recurring accruals, considered necessary
for a fair presentation of the results of operations for the periods presented
have been included.

The financial data at March 31, 2002 is derived from audited financial
statements which are included in the Companys Annual Report on Form 10-K for
the year ended March 31, 2002, and should be read in conjunction with the
audited financial statements and notes thereto. Interim results are not
necessarily indicative of results for the full year.

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.



|2. |  | Earnings per Share
|-- |  | ------------------

Earnings per share, basic, is computed based on the weighted average
number of common shares outstanding for the period. Earnings per share,
diluted, is computed based on the weighted average number of common and
potentially dilutive common equivalent shares outstanding for the period. A
reconciliation is as follows:

|                                          |                                              |   |                    |           |                   |   |           |           |      |   |           |           |  |   |           |           | 
|----------------------------------------- | -------------------------------------------- | - | ------------------ | --------- | ----------------- | - | --------- | --------- | ---- | - | --------- | --------- |  | - | --------- | --------- | 
|                                          |                                              |   | Three months ended |           | Nine months ended
|                                          |                                              |   | December 31,       |           | December 31,     
|                                          |                                              |   |                    |           |                  
|                                          |                                              |   | 2002               |           | 2001              |   | 2002      |           | 2001
|                                          |                                              |   |                    |           |                   |   |           |           |     
|Net income                                |                                              | $ | 2,605,755          |           |                   | $ | 2,184,988 |           |      | $ | 4,107,084 |           |  | $ | 4,791,664 |          
|Weighted average number of common shares: |                                              |   |                    |           |                   |   |           |           |      |   |           |           |  |   |           |          
|                                          | Basic                                        |   |                    | 6,618,334 |                   |   |           | 6,589,834 |      |   |           | 6,613,315 |  |   |           | 6,585,982 | 
|                                          | Effect of dilutive securities-
stock options |   |                    | 292,475   |                   |   |           | 429,447   |      |   |           | 339,634   |  |   |           | 421,689   | 
|                                          |                                              |   |                    |           |                   |   |           |           |      |   |           |           |  |   |           |          
|                                          | Diluted                                      |   |                    | 6,910,809 |                   |   |           | 7,019,281 |      |   |           | 6,952,949 |  |   |           | 7,007,671 | 
|                                          |                                              |   |                    |           |                   |   |           |           |      |   |           |           |  |   |           |          
|Earnings per share:                       |                                              |   |                    |           |                   |   |           |           |      |   |           |           |  |   |           |          
|                                          | Basic                                        |   | $                  | 0.39      |                   |   | $         | 0.33      |      |   | $         | 0.62      |  |   | $         | 0.73      | 
|                                          | Effect of dilutive securities                |   | $                  | 0.01      |                   |   | $         | 0.02      |      |   | $         | 0.03      |  |   | $         | 0.05      | 
|                                          |                                              |   |                    |           |                   |   |           |           |      |   |           |           |  |   |           |          
|                                          | Diluted                                      |   | $                  | 0.38      |                   |   | $         | 0.31      |      |   | $         | 0.59      |  |   | $         | 0.68      | 
|                                          |                                              |   |                    |           |                   |   |           |           |      |   |           |           |  |   |           |          

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|3. |  | New Accounting Pronouncements
|-- |  | -----------------------------

In June 2001, the Financial Accounting Standards Board issued Statements
of Financial Accounting Standards No. 141, Business Combinations and No. 142,
Goodwill and Other Intangible Assets. Statement 141 requires that the
purchase method of accounting be used for all business combinations initiated
after June 30, 2001. Statement 141 also includes guidance on the initial
recognition and measurement of goodwill and other intangible assets arising
from business combinations completed after June 30, 2001. Statement 142
prohibits the amortization of goodwill and intangible assets with indefinite
useful lives. Statement 142 requires that these assets be reviewed for
impairment at least annually. Intangible assets with finite lives will continue
to be amortized over their estimated useful lives. Additionally, Statement 142
requires that goodwill included in the carrying value of equity method
investments no longer be amortized. The Company adopted Statement 142 beginning
in the first quarter of fiscal 2003 and it did not have a material impact on
its results of operations.

In August 2001, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 144 Accounting for the Impairment or
Disposal of Long-Lived Assets (SFAS 144), which addresses financial accounting
and reporting for the impairment or disposal of long-lived assets and
supersedes SFAS No. 121, Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed Of, and the accounting and reporting
provisions of APB Opinion No. 30, Reporting the Results of Operations for a
disposal of a segment of a business. SFAS 144 is effective for fiscal years
beginning after December 15, 2001, with earlier application encouraged. The
Company adopted SFAS 144 in the first quarter of fiscal 2003 and it did not
have a material impact on its results of operations.

In December 2002, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 148 Accounting for Stock-Based
CompensationTransition and Disclosure (SFAS 148), which amends SFAS No. 123,
Accounting for Stock-Based Compensation. Statement 148 provides alternative
methods of transition for a voluntary change to the fair value based method of
accounting for stock-based employee compensation. In addition, Statement 148
amends the disclosure requirements of Statement 123 to require more prominent
and more frequent disclosures in financial statements about the effects of
stock-based compensation. The transition guidance and annual disclosure
provisions of Statement 148 are effective for fiscal years ending after
December 15, 2002, with earlier application permitted in certain circumstances.
The interim disclosure provisions are effective for financial reports
containing financial statements for interim periods beginning after December
15, 2002. The Company does not plan on changing its method of accounting for
stock-based employee compensation and will comply with the new disclosure
requirements beginning with its annual report and Form 10-K for the year ending
March 31, 2003.

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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.

Except for the historical information contained herein, the matters
addressed in this Item 2 constitute forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. Such forward-looking
statements are subject to a variety of risks and uncertainties, including those
discussed below under the heading Factors That May Affect Future Results and
elsewhere in this Quarterly Report on Form 10-Q, that could cause actual
results to differ materially from those anticipated by the Companys
management. The Private Securities Litigation Reform Act of 1995 (the Act)
provides certain safe harbor provisions for forward-looking statements. All
forward-looking statements made on this Quarterly Report on Form 10-Q are made
pursuant to the Act.

The following should be read in conjunction with the Companys financial
statements and related notes thereto provided under Item 1Financial Statements
above.

Results of Operations

The following tables set forth statements of income data and relative
percentages of net sales for the periods indicated (dollar amounts in
thousands, except per share amounts).

|                                             |         |   |                                 |      |                                |  |        |    |         |   |        |      |         |  |        |    |         |   |         |      |  |  |       |    |  |   |         |      |  |  |       |    | 
|-------------------------------------------- | ------- | - | ------------------------------- | ---- | ------------------------------ |  | ------ | -- | ------- | - | ------ | ---- | ------- |  | ------ | -- | ------- | - | ------- | ---- |  |  | ----- | -- |  | - | ------- | ---- |  |  | ----- | -- | 
|                                             |         |   | Three months ended December 31, |      | Nine months ended December 31,
|                                             |         |   |                                 |      |                               
|                                             |         |   | 2002                            |      | 2001                           |  | 2002   |    | 2001   
|                                             |         |   |                                 |      |                                |  |        |    |        
|                                             |         |   | Amount                          |      | Percent                        |  | Amount |    | Percent |   | Amount |      | Percent |  | Amount |    | Percent
|                                             |         |   |                                 |      |                                |  |        |    |         |   |        |      |         |  |        |    |        
|Net sales                                    |         | $ | 72,271                          |      |                                |  | 100.0  | %  |         | $ | 67,429 |      |         |  | 100.0  | %  |         | $ | 179,803 |      |  |  | 100.0 | %  |  | $ | 170,037 |      |  |  | 100.0 | % 
|Gross profit                                 |         |   | 22,644                          |      |                                |  | 31.3   | %  |         |   | 19,544 |      |         |  | 29.0   | %  |         |   | 53,211  |      |  |  | 29.6  | %  |  |   | 50,185  |      |  |  | 29.5  | % 
|Selling, general and
administrative expenses |         |   | 18,292                          |      |                                |  | 25.3   | %  |         |   | 15,777 |      |         |  | 23.4   | %  |         |   | 46,233  |      |  |  | 25.7  | %  |  |   | 42,142  |      |  |  | 24.8  | % 
|Income from operations                       |         |   | 4,352                           |      |                                |  | 6.0    | %  |         |   | 3,767  |      |         |  | 5.6    | %  |         |   | 6,978   |      |  |  | 3.9   | %  |  |   | 8,043   |      |  |  | 4.7   | % 
|Interest expense                             |         |   | (148                            | )    |                                |  | (0.2   | %) |         |   | (101   | )    |         |  | (0.1   | %) |         |   | (272    | )    |  |  | (0.2  | %) |  |   | (30     | )    |  |  | (0.0  | %)
|Income before taxes                          |         |   | 4,204                           |      |                                |  | 5.8    | %  |         |   | 3,666  |      |         |  | 5.4    | %  |         |   | 6,706   |      |  |  | 3.7   | %  |  |   | 8,013   |      |  |  | 4.7   | % 
|Net income                                   |         |   | 2,606                           |      |                                |  | 3.6    | %  |         |   | 2,185  |      |         |  | 3.2    | %  |         |   | 4,107   |      |  |  | 2.3   | %  |  |   | 4,792   |      |  |  | 2.8   | % 
|Earnings per share:                          |         |   |                                 |      |                                |  |        |    |         |   |        |      |         |  |        |    |         |   |         |      |  |  |       |    |  |   |         |      |  |  |       |   
|                                             | Basic   |   | $                               | 0.39 |                                |  |        |    |         |   | $      | 0.33 |         |  |        |    |         |   | $       | 0.62 |  |  |       |    |  |   | $       | 0.73 |  |  |       |    | 
|                                             | Diluted |   | $                               | 0.38 |                                |  |        |    |         |   | $      | 0.31 |         |  |        |    |         |   | $       | 0.59 |  |  |       |    |  |   | $       | 0.68 |  |  |       |    | 

Three Months Ended December 31, 2002 Compared to Three Months Ended
December 31, 2001.Sales increased from $67.4 million for the three months
ended December 31, 2001 to $72.3 million for the same period this year, a 7.2%
increase. The increase is the result of opening two new stores in late
November 2002, aided by a comparable store sales increase of 2.2%. Even with
the increase, management believes that discretionary spending continues to be
impacted by weak consumer confidence in reaction to the lack of economic
recovery. Comparable store sales are based upon stores opened throughout both
periods.

Gross profit as a percent of sales increased from 29.0% for the three
months ended December 31, 2001 to 31.3% for the same period this year primarily
due to a tight inventory management focus. This focus reduced the need for
promotional pricing as compared to the same period last year
producing a near 200 basis point improvement in merchandise margins. Partially
offsetting the margin gains is increased occupancy costs resulting from
infrastructure improvements consisting of the opening of a new distribution
center in February 2002.

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Selling, general and administrative expenses as a percent of sales
increased from 23.4% for the three months ended December 31, 2001 to 25.3% for
the same period this year. The increase is primarily the result of increased
professional fees and incentive based labor costs as a percent of sales.

Interest expense was $148,000 for the period ended December 31, 2002,
compared to $101,000 for the period ended December 31, 2001, due to the
increased use of the Companys credit facility in the current period as
compared to the same period last year.

The effective income tax rate was 40.2% for the three months ended
December 31, 2001, compared to 38.0% for the same period this year. The
decrease is the result of a reduced blended state income tax rate, from the
effects of the Companys expansion into Nevada which has no income tax and
qualifying tax credits from California not earned in the same period last year.

Net income increased 18.2% from $2.2 million, or $0.31 per diluted share,
for the three months ended December 31, 2001 to $2.6 million, or $0.38 per
diluted share, for the same period this year, primarily as a result of
increased gross profit resulting from higher sales and better inventory
management.

Nine Months Ended December 31, 2002 Compared to Nine Months Ended December
31, 2001.Sales increased from $170.0 million for the nine months ended
December 31, 2001 to $179.8 million for the same period this year, a 5.7%
increase. The increase is the result of opening three new stores in the period
last year and two new stores in late November 2002. Comparable store sales
remained flat compared to the same period last year, as the results from the
all important holiday selling period reflected a positive change from the
negative comparable store sales experienced in the first half of the fiscal
year. Comparable store sales are based upon stores opened throughout both
periods.

Gross profit as a percent of sales increased slightly from 29.5% for the
nine months ended December 31, 2001 to 29.6% for the same period this year. In
the current period an 80 basis point reduction in markdowns was offset by the
increased occupancy costs resulting from infrastructure improvements consisting
of the opening of a new distribution center in February 2002.

Selling, general and administrative expenses as a percent of sales
increased from 24.8% for the nine months ended December 31, 2001 to 25.7% for
the same period this year. Increased Southern California utility expense
combined with increases in professional fees and incentive based labor, as a
percent of sales, were the primary factors causing the change in selling and
administrative expenses this period as compared to the same period last year.

Interest expense was $272,000 for the period ended December 31, 2002,
compared to $30,000 for the period ended December 31, 2001, due to the
increased use of the Companys credit facility in the current period compared
to the same period last year.

The effective income tax rate was 40.4% for the nine month period ending
December 31, 2001, compared to 38.8% for the same period this year. The
decrease is the result of a reduced blended state income tax rate, from the
effects of the Companys expansion into Nevada which has no income tax and
qualifying tax credits from California not earned in the same period last year.

Net income decreased from $4.8 million, or $0.68 per diluted share, for
the nine months ended December 31, 2001 to $4.1 million, or $0.59 per diluted
share, for the same period this year, primarily as a result of increased
selling, general and administrative expenses.

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Liquidity and Capital Resources

The Companys primary capital requirements are for inventory and store
expansion, relocation and remodeling. Historically, cash from operations,
credit terms from vendors and bank borrowing have met the Companys liquidity
needs. Management believes that these sources will be sufficient to fund
currently anticipated cash requirements for the foreseeable future.

Net cash provided by operating activities is the result of net income,
adjusted for depreciation and amortization, and increases in accounts payable
partially offset by inventory purchases. For the nine months ended December 31,
2002 $8.6 million was generated compared to $6.2 million for the same period
last year.

Inventories increased by $15.0 million and $17.0 million for the nine
months ended December 31, 2002 and 2001, respectively, compared to the
respective year-end balances primarily due to the seasonal build-up of winter
related inventory. Inventory at December 31, 2002 is $3.5 million greater than
the same period last year primarily as a result of the opening of two stores
since the end of this period in the prior year. The Company evaluates its
inventory on a per store basis and in the face of inconsistent sales trends it
has focused on inventory management. As a result the average inventory per
store decreased by 1.7% from December 31, 2002 as compared to December 31,
2001.

Historically accounts payable has increased as inventory increases. In
fiscal 2002, invested cash built-up in prior years was used to fund the
Companys expansion plans causing a bank overdraft of $6.5 million, which
represents the total of checks in transit in excess of cash on hand. For the
nine months ended December 31, 2002 and 2001, accounts payable combined with
bank overdraft increased $7.5 million and $14.6 million, respectively,
primarily as a result of increased inventory levels and the timing of payments
to vendors.

The timing of income tax payments provided $1.9 million of cash for the
nine months ended December 31, 2002 versus having used $1.2 million for the
same period last year. The improvement was due to changes in the tax code
allowing for accelerated depreciation after September 11, 2001 and the relative
change in quarterly taxable income as compared to the same period last year.

Other accrued expenses increased $5.3 million for the nine months ended
December 31, 2002, compared to an increase of $2.4 million for the same period
last year, as expenses related to the settlement of the class action lawsuit
were partially accrued in the nine months ended December 31, 2000, and
subsequently paid in the nine months ended December 31, 2001.

Net cash used in investing activities for the nine months ended December
31, 2002 was $5.1 million, resulting from capital expenditures primarily for
two new stores opened in November 2002 and the relocation of the corporate
headquarters occupied in October 2002. For the same period last year net cash
used in investing activities was $10.2 million, primarily from capital
expenditures to enhance merchandising presentation in the Companys existing
stores, capital expenditures related to the Companys new distribution center
and the opening of three new stores. Management has been cautious with its
capital expenditures in reaction to lackluster economic conditions; several
projects planned for the current year have been deferred to the future periods.

Net cash provided by financing activities reflects advances and repayment
of borrowings under the Companys revolving credit facility. As of December
31, 2002 and 2001, the Company had no outstanding borrowings on this facility.

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The Companys credit facility with Bank of America National Trust and
Savings Association, Inc. (the Lender) provides for advances up to $20
million, increasing to $30 million for the period October 1, 2002 through
December 31, 2002, less the amount of any outstanding draws, up to a $1.5
million maximum in authorized letters of credit. Interest accrues at the
Lenders prime rate plus 1/4% (4.5% at December 31, 2002) or can be fixed for
a period of time at the then current rate established under one of several
indices, all at the Companys option. This credit facility expires on
September 30, 2003, and the Company expects to renegotiate and extend the term
of this agreement or obtain another form of financing before that date. The
Companys obligation to the Lender is presently secured by a first priority
lien on substantially all of the Companys non-real estate assets, and the
Company is subject to several restrictive covenants. The principal operating
covenants require the Company to maintain certain minimum cash flow coverage
and debt to equity ratios and restrict the level of capital expenditures,
calculated on a quarterly basis. The Company currently is in compliance with
the amended covenants. The Company believes its credit line with the Lender is
sufficient to fund capital expenditures for the foreseeable future and to meet
seasonal fluctuations in cash flow requirements. However, unexpected
conditions could require the Company to request additional borrowing capacity
from the Lender or alter its expansion plans or operations.

The Companys primary contractual obligations and commitments are its
store leases with initial terms expiring from 2004 through 2020 and typically
provide for multiple five-year renewal options as of March 31, 2002:

|                        |  |                  |             | 
|----------------------- |  | ---------------- | ----------- | 
|Payments due by period: |  | Operating Leases
|                        |  |                 
|Through March 31, 2003  |  | $                | 12,992,154  | 
|2 - 3 years             |  |                  | 26,087,236  | 
|4 - 5 years             |  |                  | 25,124,427  | 
|After 5 years           |  |                  | 58,266,144  | 
|                        |  |                  |             | 
|Total                   |  | $                | 122,469,961 | 

All retail store leases provide for base rent which may or may not be
credited against percentage rent based upon gross sales from the premises. In
some of the leases, base rental amounts increase as the lease term progresses,
although in some cases, the Company expects that percentage rent will more than
offset the base rental amounts.

No cash dividends were declared on Common Stock in fiscal 2002. The
Company intends to retain earnings for use in the operation and expansion of
its business and, therefore, does not anticipate paying any cash dividends in
the foreseeable future.

Critical Accounting Policies and Use of Estimates

The Companys significant accounting policies are described in Note 2 of
the Companys Annual Report on Form 10-K for the year ended March 31, 2002,
which have been prepared in accordance with accounting principles generally
accepted in the United States. In preparing the financial statements, the
Company is required to make estimates and judgments which affect the results of
its operations and the reported value of assets and liabilities. Actual results
may differ from these estimates. The Company believes that the following
summarizes critical accounting policies which require significant judgments and
estimates in the preparation of its consolidated financial statements

Inventory Valuation.Merchandise inventories are stated at the lower of
cost (first-in, first-out determined by the retail method of accounting) or
market. The Company considers cost to include

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direct cost of merchandise, plus internal costs associated with
merchandise procurement, storage and handling. The Company regularly reviews
aged and excess inventories to determine if the carrying value of such
inventories exceeds market value; a reserve is recorded to reduce the carrying
value to market value as necessary. A determination of market value requires
estimates and judgment based on the Companys historical markdown experience
and anticipated markdowns based on future merchandising and advertising plans,
seasonal considerations, expected business trends and other factors.

Gift Certificate Redemption.The Company offers its customers the option
of purchasing gift certificates which may be used toward the future purchase of
the Companys product offerings. These gift certificates have no expiration
dates. The Company records unredeemed gift certificates as a liability until
the point of redemption. The Companys historical experience indicates that
not all issued gift certificates get redeemed. Accordingly, the Company
periodically adjusts the carrying value of the gift certificate liability. The
Company monitors redemptions rates as a percent of issuances and uses this
information to estimate probable redemption of all outstanding gift
certificates. This calculation is based on historical experience, and future
redemption rates may vary if consumer purchasing practices change.

Factors That May Affect Future Results

The statements which are not historical facts contained in this Quarterly
Report on Form 10-Q are forward looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, that involve risks and
uncertainties. These risks and uncertainties include, but are not limited to,
those set forth below.

Economic Conditions.The retail industry historically has been subject to
substantial cyclical variation, and a recession in the general economy or
uncertainties regarding future economic prospects that affect consumer spending
habits have had, and may in the future have, a materially adverse effect on the
Companys results of operations.

Competition.The sporting goods business and the retail environment are
highly competitive, and the Company competes with national, regional and local
full-line sporting goods chains, specialty stores, supplier owned stores,
discount and department stores, and e-tailers. A number of the Companys
competitors are larger and have greater resources than the Company.

Regional Market Concentration.Currently, all of the Companys stores are
located in Southern California and the Las Vegas area of Nevada. Accordingly,
the Company is subject to regional risks, such as the economy, weather
conditions, natural disasters and government regulations. If the region were
to suffer an economic downturn or if other adverse events were to occur, there
could be an adverse effect on the Companys net sales and profitability and its
ability to implement its planned growth. Several of the Companys competitors
operate stores across the United States and, thus, are not as vulnerable as the
Company to such regional risks.

Single Distribution Center. The Company has a single distribution center
and if there is a natural disaster or other serious disruption at the facility,
merchandise may be lost or undeliverable to our stores, thereby, reducing sales
and profitability.

Expansion Plan.The Companys continued growth is dependent to a
significant degree upon its ability to open new stores on a profitable basis.
The Companys ability to expand will depend, in part, on business conditions
and the availability of satisfactory store locations based on local

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competitive conditions, site availability and cost, and the Companys
ability to provide and maintain high service levels and quality brand
merchandise at competitive prices. In addition, a decline in the Companys
overall financial performance, increased rents or any other adverse effects
arising from the commercial real estate market in the Companys markets may
adversely effect the Companys current growth plan. There can be no assurance
that the Company will possess sufficient funds to finance the expenditures
related to its planned growth, that new stores can be opened on a timely basis,
that such new stores can be operated on a profitable basis, or that such growth
will be manageable.

Future Capital Requirements.The Company may not be able to fund its
future growth or react to competitive pressures if it lacks sufficient funds.
Unexpected conditions could cause the Company to be in violation of its
Lenders operating covenants. Currently, the Company feels it has sufficient
cash available through its bank credit facilities and cash from operations to
fund existing operations for the foreseeable future. The Company cannot be
certain that additional financing will be available in the future if necessary.

Management of Growth.Since its inception, the Company has experienced
periods of rapid growth. No assurance can be given that the Company will be
successful in maintaining or increasing its sales in the future. Any future
growth in sales will require additional working capital and may place a
significant strain on the Companys management, management information systems,
inventory management, distribution facilities and receivables management. Any
failure to timely enhance the Companys operating systems, or unexpected
difficulties in implementing such enhancements, could have a material adverse
effect on the Companys results of operations.

Dependence on Key Personnel.The Company depends on the continued service
of its senior management. The loss of the services of any key employee could
hurt the business. Also, the future success of the Company depends on its
ability to identify, attract, hire, train and motivate other highly skilled
personnel. Failure to do so may adversely affect future results.

Seasonality.The Companys business is seasonal in nature. As is typical
with other sporting goods retailers, the Companys sales volume increases
significantly during the Christmas holiday season and the peak ski and
snowboard season generally corresponds to the months of November, December and
January. Therefore, the Companys results of operations are likely to vary
during its fiscal year. Historically the Companys operating results have been
influenced by the quantity and timing of snowfall at the resorts frequented by
those living in Southern California. An early seasonal snowfall often
influences sales as it generally extends the demand for winter related
merchandise while a late snowfall will have the opposite effect. Suppliers in
the ski and snowboard industry require purchasing commitments in April for a
fall delivery. If snowfall does not provide an adequate base, occurs late in
the season, or if sales do not meet expectations, the Company may be required
to mark down its winter apparel and equipment.

Variability of Quarterly Results. The Company has experienced, and
expects to continue to experience, a substantial variation in its net sales and
operating results from quarter to quarter. The Company believes that the
factors which influence this variability of quarterly results include general
economic and industry conditions that affect consumer spending, changing
consumer demands, the timing of the Companys introduction of new products, the
level of consumer acceptance of each new product, the seasonality of the
markets in which the Company participates, the weather and actions of
competitors. Accordingly, a comparison of the Companys results of operations
from period to period is not necessarily meaningful, and the Companys results
of operations for any period are not necessarily indicative of future
performance.

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Closely Controlled Stock. At January 29, 2003, Norbert Olberz, the
Companys founder, Chairman Emeritus, director and principal stockholder (the
Principal Stockholder), owned approximately 66% of the Companys outstanding
common stock. Mr. Olberz effectively has the ability to control the outcome on
all matters requiring stockholder approval, including, but not limited to, the
election and removal of directors, and any merger, consolidation or sale of all
or substantially all of the Companys assets, and to control the Companys
management and affairs.

Stock Price. The market price of the Companys common stock is likely to
be volatile and could be subject to significant fluctuations in response to
factors such as quarterly variations in operating results, operating results
which vary from the expectations of securities analyst and investors, changes
in financial estimates, changes in market valuations of competitors,
announcements by the Company or its competitors of a material nature, additions
or departures of key personnel, future sales of common stock and stock volume
fluctuations. Also, general political and economic conditions such as a
recession or interest rate fluctuations may adversely affect the market price
of the Companys stock.




Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Companys exposure to interest rate risk consists primarily of
borrowings under its credit facility that bears interest at floating rates
(primarily LIBOR rates). The impact on earnings or cash flows during the next
fiscal year from a one percentage point change in the interest rate would not
be significant.

Item 4. Controls and Procedures.




Within the 90 days prior to the filing date of this report, the Chief
Executive Officer and the Chief Financial Officer of the Company, with the
participation of the Companys management, carried out an evaluation of the
effectiveness of the Companys disclosure controls and procedures pursuant to
Exchange Act Rule 13a-14. Based upon that evaluation, the Chief Executive
Officer and the Chief Financial Officer believe that, as of the date of the
evaluation, the Companys disclosure controls and procedures are effective in
making known to them material information relating to the Company (including
its consolidated subsidiaries) required to be included in this report.

Disclosure controls and procedures, no matter how well designed and
implemented, can provide only reasonable assurance of achieving an entitys
disclosure objectives. The likelihood of achieving such objections is affected
by limitations inherent in disclosure controls and procedures. These include
the fact that human judgment in decision-making can be faulty and that
breakdowns in internal control can occur because of human failures such as
simple errors or mistakes or intentional circumvention of the established
process.

There were no significant changes in the Companys internal controls or in
other factors that could significantly affect internal controls, known to the
Chief Executive Officer or the Chief Financial Officer, subsequent to the date
of the evaluation.

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Part II  OTHER INFORMATION

Part II  OTHER INFORMATION




Item 1. Legal Proceedings.

The Company is involved in various routine legal proceedings incidental to
the conduct of its business. Management does not believe that any of these
legal proceedings will have a material adverse impact on the business,
financial condition or results of operations of the Company, either due to the
nature of the claims, or because management believes that such claims should
not exceed the limits of the Companys insurance coverage.




Item 2. Changes in Securities and Use of Proceeds.

None




Item 3. Defaults Upon Senior Securities.

Not Applicable




Item 4. Submission of Matters to a Vote of Securities Holders.

None




Item 5. Other Information.

Stockholder Proposals

The proxy materials for the 2002 annual meeting of the stockholders to be
held on August 1, 2002 were mailed to stockholders of the Company on June 21,
2002. Under certain circumstances, stockholders are entitled to present
proposals at stockholders meetings. Any such proposal to be included in the
proxy statement for the Companys 2003 annual meeting of stockholders must be
submitted by a stockholder prior to February 22, 2003 in a form that complies
with applicable regulations. In the event a stockholder proposal is not
submitted to the Company prior to May 7, 2003, the proxies solicited by the
Board of Directors for the 2003 annual meeting of the stockholders will confer
authority on the holders of the proxy to vote the shares in accordance with
their best judgment and discretion if the proposal is presented at the 2003
annual meeting of stockholders without any discussion of the proposal in the
proxy statement for such meeting.

Changes in Control

On December 20, 2002, Norbert J. Olberz, the founder, Chairman Emeritus
and principal stockholder of Sport Chalet, Inc. (the Company), and his wife,
Irene M. Olberz, through The Olberz Family Trust, a revocable grantor trust
(the Trust), granted to SC Option, LLC, a California limited liability
company (the LLC), an option (the Option) to purchase, under certain
circumstances, all of the shares (currently 4,351,972) of the Companys Common
Stock (the Option Shares) held by the Trust, pursuant to an Option Agreement
dated as of December 20, 2002 (the Option Agreement), between the LLC and
Norbert J. Olberz and Irene M. Olberz (the Trustees) as co-trustees of the
Trust. The managers of the LLC currently are Craig L. Levra, the Companys
Chairman of the Board, President, and Chief Executive Officer, and Howard K.
Kaminsky, the Companys Executive Vice President-Finance and Chief Financial
Officer, who hold 59.1% and 39.4%, respectively, of the LLC. The members of
the LLC are Messrs. Levra and Kaminsky and Dennis D. Trausch, Claudia G. Reich
and Jeff Lichtenstein, the Companys Executive Vice President-Growth and
Development, Senior Vice President-Marketing and Advertising, and Vice
President-Loss Prevention

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and Risk Management, each of whom holds 0.5% of the LLC. The Option is
exercisable upon the death of Norbert J. Olberz. The LLC and the Trustees
entered into the Option Agreement to provide for the smooth transition of
control of the Issuer in the event of the death of Mr. Olberz, the Companys
founder and Chairman Emeritus.

Pursuant to the terms of Option Agreement, the LLC acquired the Option for
$1,000 to purchase all, but not less than all, of the Option Shares at any time
during the period of 181 days from and after the date of death of Mr. Olberz
(the vesting or measurement date). Prior to the vesting date, the Trustees
are permitted to encumber the Option Shares and to sell Option Shares privately
or in the market or to transfer Option Shares by gift or otherwise as long as
the Trust continues to hold at least 51% of the outstanding Common Stock on a
fully diluted basis. The purchase price per share for the Option Shares is
equal to the closing price of the Common Stock on the day preceding the vesting
date.

The Option Agreement also provides the LLC with a right to negotiate with
the Trustee if the Trustee desires to entertain or effect, or commences any
activities that might reasonably be expected to result in, any Acquisition
Proposal (as defined in the Option Agreement). The Option Agreement is
subject to termination upon certain events, including the mutual consent of the
Trust and the LLC or in the event Craig L. Levra ceases to be the Chief
Executive Officer of the Company for any reason. In addition, the purchase of
the Option Shares by the LLC upon exercise of the Option is subject to certain
conditions, including the ability of the LLC to obtain sufficient financing to
purchase the Option Shares. The Option Agreement was negotiated directly
between Norbert J. Olberz and the members of the LLC.

For more information, see the Companys current report on Form 8-K filed
with the Securities and Exchange Commission on December 23, 2002.




Item 6. Exhibits and Reports on Form 8-K.



| | (a) |  | Exhibits:
| | --- |  | ---------

|     |  |                                                                                                                      
|---- |  | ---------------------------------------------------------------------------------------------------------------------
|10.1 |  | Employment contract for Chairman of the
Board, Chief Executive Officer and President                                 
|     |  |                                                                                                                      
|10.2 |  | Employment contract for Executive Vice
President  Finance, Chief Financial Officer and
Secretary                    
|     |  |                                                                                                                      
|10.3 |  | Employment contract for Executive Vice
President  Growth and Development                                            
|     |  |                                                                                                                      
|10.4 |  | Employment contract for Senior Vice
President  Marketing and Advertising                                            
|     |  |                                                                                                                      
|99.1 |  | Certification Pursuant to 18 U.S.C.
Section 1350 as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002



| | (b) |  | Reports on Form 8-K:                                                                                                                                                                     
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | During the quarter for which this Report on Form 10-Q is
filed, the Company filed a Report on Form 8K, dated December
20, 2002, with respect to Item 1. Changes in Control of
Registrant.

16



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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned duly authorized officer and principal financial officer.

|                        |  |                                                                                                                                         |  |                       
|----------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------
|                        |  | SPORT CHALET, INC.                                                                                                                     
|                        |  |                                                                                                                                         |  |                       
|                        |  |                                                                                                                                         |  |                       
|DATE:  January 29, 2003 |  | By:                                                                                                                                     |  | /s/ Howard K. Kaminsky
|                        |  |                                                                                                                                         |  |                       
|                        |  | Howard K. Kaminsky
Executive Vice President-Finance,
Chief Financial Officer and Secretary
(Principal Financial and Accounting Officer)

17



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##### Table of Contents



CERTIFICATION

I, Craig Levra, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of Sport Chalet, Inc.;

2.     Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3.     Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant. as of, and for, the periods presented in this quarterly report;

4.     The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that
material information relativing to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the Evaluation Date); and

c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

5.     The registrants other certifying officers and I have disclosed based on our
most recent evaluation, to the registrants auditors and the audit committee of
registrants board of directors (or persons performing the equivalent
function):

a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to record,
process, summarize and report financial data and have identified for the
registrants auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal controls;
and

6.     The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

|                        |  |                                     
|----------------------- |  | ------------------------------------
|Date:  January 29, 2003 |  | /s/ Craig Levra                     
|                        |  |                                     
|                        |  | Craig Levra,
Chief Executive Officer

18



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##### Table of Contents



CERTIFICATION

I, Howard Kaminsky, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of Sport Chalet, Inc.;

2.     Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3.     Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant. as of, and for, the periods presented in this quarterly report;

4.     The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that
material information relativing to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the Evaluation Date); and

c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

5.     The registrants other certifying officers and I have disclosed based on our
most recent evaluation, to the registrants auditors and the audit committee
registrants board of directors (or persons performing the equivalent
function):

a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to record,
process, summarize and report financial data and have identified for the
registrants auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal controls;
and

6.     The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

|                       |  |                                         
|---------------------- |  | ----------------------------------------
|Date: January 29, 2003 |  | /s/ Howard Kaminsky                     
|                       |  |                                         
|                       |  | Howard Kaminsky,
Chief Financial Officer

19