Golf Galaxy, Inc.'s net sales for the fourth quarter of fiscal 2006 increased 49.5% to $40.1 million, compared with $26.8 million for the prior-year period. Comparable store sales increased 2.5% for the fiscal fourth quarter, on top of an increase of 4.8% for the fourth quarter of fiscal 2005. Sales were on target for December and January, but were below expectations in February due to challenging weather in many of the company’s markets.

The company saw gross margins decrease 200 basis points to 26.3% of sales. Management said that the majority of the margin hit occurred during December when the company had a high level of promotions for the holiday period. GGXY reported a net loss of $265,000, or 2 cents per diluted share, in Q4, compared with a net loss of $451,000, or 74 cents per diluted share, for the fourth quarter of fiscal 2005. Due to the seasonal nature of the golf market, the company typically reports a net loss during the fourth quarter, but this time around, GGXY saw a more favorable tax rate and expense controls help to reduce the red ink. GGXY had anticipated a much wider loss for Q4.

Golf Galaxy opened one new store during its fiscal fourth quarter and 16 for the full year for a total of 50 stores at year-end.

Full year sales were up 50.4% to $200.1 million for the period ended February 25 from net sales of $133.1 million in the prior year. Comps were up 7.3% for the year on top of a 6.7% gain in the prior year. Gross margins were flat for the year at 29.3% of sales. Net income was down 30.1% to $5.3 million, or 47 cents a diluted share, compared to $7.5 million, or 98 cents per diluted share, in the prior year.

The company expects net sales in the $84 to $88 million range for the first quarter, up 43% to 50% over the year-ago quarter. Comparable store sales are expected to increase in the low-single-digits. Net income is currently expected to be $2.0 million to $2.5 million (pending the final purchase price allocation of The GolfWorks acquisition) with diluted earnings per share of 17 cents to 22 cents. Golf Galaxy plans to open 14 to 16 new stores during fiscal 2007 and has opened 6 stores since the beginning of the new fiscal year. The company currently operates 56 stores in its chain.