Golfsmith Q2 Profits Climb 34 Percent

The company has opened four new stores and closed three stores since the second quarter of last year.
  
Operating income for the second quarter increased 32.2 percent to $9.7 million as compared to operating income of $7.3 million for the same period last year. Second quarter of fiscal 2011 operating income included $0.2 million in lease termination charges. Excluding these charges, operating income totaled $9.9 million.

Net income rose 33.9 percent to 8.3 million, or 49 cents per diluted share, as compared to net income of $6.2 million, or 36 cents for the same period last year. Excluding lease termination charges net income for the second quarter of fiscal 2011 was $8.5 million, or 50 cents per share.

As of July 2, 2011, the company had $31.2 million of outstanding borrowings under its credit facility and borrowing availability of $45.4 million. This compares to $27.6 million of outstanding borrowings under its credit facility and borrowing availability of $44.5 million at July 3, 2010.

As of July 2, 2011, total inventory was slightly higher than last year at $95.5 million compared to $95.3 million as of the second quarter of fiscal 2010. Comparable average store inventory decreased approximately 3%.

Martin Hanaka, Chairman and Chief Executive Officer of Golfsmith, commented, “The strong momentum in our business carried through to the second quarter as we continue to benefit from our key strategic initiatives focused on our merchandising assortment, selling culture and operational excellence. Our comp growth was driven primarily by higher conversion rates and AOV demonstrating the strength of our product assortment. In addition, we continue to achieve market share gains as we benefit from ongoing industry consolidation. Longer term we believe that we are well positioned to deliver strong sales and profitability growth as we maintain focus on delivering the most innovative product assortment in an exciting shopping environment while providing excellent customer service.”

Year-to-Date Results

Net revenues were $211.7 million for the six-month period ended July 2, 2011 as compared to net revenues of $185.7 million for the same period last year. Net revenues reflect a 9.3 percent increase in comparable store sales and a 13.5 percent increase in net revenues from its direct-to-consumer channel. The Company has opened four new stores and closed three stores since the second quarter of last year.

Operating income increased 218.0% to $6.4 million for the six-month period ended July 2, 2011 as compared to operating income of $2.0 million for the same period last year. Results for 2011 include $0.2 million in lease termination charges.

Net income for the six months ended July, 2, 2011 totaled $5.2 million, or $0.31 per diluted share compared to net income of $1.4 million, or $0.08 per diluted share for the six-month period ended July 3, 2010. Excluding lease termination charges, the Company’s net income year to date as of July 2, 2011 was $5.4 million, or $0.32 per share.