Golf Galaxy issued its first quarterly report as a public company with all signs pointing to a solid start, as increases to the top and bottom lines and improvements for each line between boosted its fortunes in a weak golf market. Golf Galaxy needed a strong quarter as the company sees over a third of the years sales revenues and the “bulk” of its profits generated during Q2.
Comparable store sales increased 7.4% for the second quarter ended August 27 on top of a 5.9% increase last year. In the conference call discussing the results, Golf Galaxy management pointed to increased market share as the main reason for their comp sales gains; with items per transaction and average ticket price helping, but not the main force. The strongest categories for GGXY were pre-owned clubs, mens and womens apparel, and PGA services, including golf lessons, club fittings, and club repair.
Golf Galaxy opened eleven new stores in the first six months of the fiscal year. At the end of second quarter fiscal 2006 Golf Galaxy operated 45 stores in 19 states. The company plans to open a total of 16 new stores during the year, with four stores expected to open in November already announced.
On Aug. 3, 2005, Golf Galaxy completed its initial public offering of 4,542,500 shares of common stock, of which 3,000,000 were offered by the company, at a price of $14.00 per share. As part of the offering, existing preferred stock was converted to common stock and a portion of the proceeds of the offering was used to pay accumulated dividends to preferred shareholders.
Looking forward, the company sees sales between $30 million and $32 million for the third quarter, a 48% to 58% increase over the third quarter last year. Driving the sales gains is an expected 2% to 6% comparable store sales increase. However, Golf Galaxy does not see these improvement as strong enough to produce income gains, expecting a loss of between $2.2 million and $1.8 million.
For the full year, sales should be between $197 million and $202 million on a 6% to 8% comp sales increase with net income of $4.5 million to $5.1 million.
|Second Quarter Results|
|(in $ millions)||2005||2004||Change|
|Gross Profit %||31.7%||31.3%||+40 bps|
|Inven @ Qtr-end||$36.7||$21.8||+68.5%|