This turn of phrase comes indeed from Yiddish, and is used quite frequently in (colloquial) American English. It consists in a repetition of a word, changing its beginning into schm-, and has a sarcastic intent, expressing doubt or derision about the original word. Here, it would either mean that the person using the expression doubts that whatever was described as "classic" deserves the epithet ("I doubt this is classic"), or possibly finds such classic stuff worthless ("what do I care if it's classic?").
The first meaning is slightly more probable, but it's difficult to be sure without more context, i.e. knowing what was exchanged earlier.
Ref. 1 shows an example of expressing doubt on how "classic" some films are.

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Note added at 9 hrs (2015-08-17 22:15:27 GMT)
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In case I didn't explain the usage clearly enough, here is the Wikipedia page:
http://en.wikipedia.org/wiki/Shm-reduplication