Golfsmith International, Inc. reported net revenues of $102.5 million for the quarter ended July 2, 2005, a 5.8% increase over $96.9 million for last year's quarter. Net income for the period increased 160.9% to $6.0 million from $2.3 million last year. Not all was rosy, though, as comp store, international, and Direct-to-Consumer sales were all down in varying degrees for the quarter.
International sales fell 25.1%, or $0.5 million, which the company attributes to the sale of the rights to a trademark in fiscal 2004 that made up about one-third of International sales in Q2 last year.
Comp store sales declined 0.5% versus Q2 last year, a period that posted a 0.7% comp store sales gain for the retailer. Golfsmith pointed to increased competition in select markets, offset by a 1.0% increase in the number of golf rounds played in the U.S. during the quarter.
Golfsmith had 49 superstores in operation as of July 2, a net gain of seven doors since the year-ago period. The company incurred $0.9 million in store pre-opening expenses related to the opening of three new retail locations and the opening of two new retail locations during the third fiscal quarter of 2005. Superstores accounted for 72.6% of sales in the quarter, compared to 70.0% of sales for the year-ago period.
Direct-to-Consumer sales slipped $0.4 million, or 1.5%, for the quarter. As in the first quarter, Golfsmith pointed to planned reductions in catalog circulation intended to improve direct-to-consumer channel profitability for the decrease in segment sales this quarter.
Gross margins were a positive metric for Golfsmith, as margins improved 250 basis points to 36.9% of sales, compared to 34.4% in Q2 last year. The retailer pointed to increased volumes that led to better pricing from vendors as a key contributor here. Combining with the GM increase to boost income was a 50 point decrease in SG&A expenses to 27.3% of sales for the quarter.