Canadian golf-specialty retailer, Golf Town followed up a record second quarter with a decent third, but felt that much of the record second quarter was due to sales that would normally have occurred during Q3. Nonetheless, the company still saw its pre-tax income outgain sales for the quarter.
Revenues for the third quarter ended September 30, 2005 increased 12% to CA$60.9 million ($50.6 mm) from CA$54.4 million ($41.6 mm) for the third quarter of 2004, before the company went public. EBITDA increased by 8% to CA$8.5 million ($7.1 mm) in the same period.
Successful new store openings were largely responsible for the strong improvement with higher web-based and special event sales making growing contributions, accounting for CA$0.7 million ($0.6 mm). The company opened two new stores in early March 2005 and one new store in late May, which together generated CA$5.3 million ($4.4 mm) in sales. Same-store sales for the quarter were 1% higher than the same quarter last year, but were tempered by a lack of new product launches during the quarter and an earlier start to the golfing season that saw many traditional Q3 sales shift forward to the second quarter.
Gross profit as a percentage of sales decreased 30 basis points to 32.95% in the third quarter compared to 33.25% in the period a year earlier coming as a result of the sales increase and related increase in cost of sales. SG&A expenses also increased as a result of sales, up 30 basis points to 19.1% from 18.8% last year. Management pointed exclusively to new store openings as the reason behind the increase.
Golf Town posted CA$7.1 million ($5.9 mm) in pre-tax income for the third quarter, up 15.2% from CA$6.2 million ($4.7 mm) last year with the sales increase translating through to the bottom line despite GM declines and SG&A increases.
