Golf Town Sees 15% Annual Sales Increase

A strong fourth quarter led to a strong fiscal year for Canadian golf-specialty retailer Golf Town. For the fourth quarter, which ended December 31, 2006, net sales increased 16.4% to CA$37.7 million ($33.1 mm) from CA$32.4 million ($27.6 mm) on a 4.0% comparable store sales increase.

As a percentage of sales, gross profit rose 460 basis points to 37.6% from 33% during last year’s quarter.

The sales and margins increases helped the company turn the net loss of CA$292,000 ($248,900) reported during the fourth quarter of 2005 to a net profit of CA$523,000 ($459,600) during the most recent quarter. In diluted earnings per share terms, net income for the quarter was CA 4 cents (4 cents) up from a loss of CA 2 cents (2 cents) per share in the year-ago quarter.

For the full year, Golf Town saw sales increase 14.8% to CA$220.1 million ($194.1 mm) from CA$191.7 million ($158.4 mm) last year. The increase was due to the addition of three new stores in 2005 and four new stores in 2006 for a total of 28 at year-end, as well comp store sales growth of 2.9%.

Gross profit as a percentage of sales also grew, to 35% in 2006 from 33.8% in 2005 due to “better buying terms from [the company’s] suppliers and lower inventory shrinkage expense compared to 2005.” SG&A expenses also increased for the year, up 50 basis points to 23.8% of sales, but were more than offset by the margins expansion.

Net income increased 26.1% to CA$16.1 million ($14.2 mm) from CA$12.7 million ($10.5 mm) in 2005. For 2006, diluted earnings per share were CA$1.28 ($1.13), increasing 15.5% from CA$1.02 (84 cents) in 2005.

About The Author

Thomas J. Ryan

Thomas J. Ryan Senior Business Editor | SGB Media tryan@sgbonline.com | 917.375.4699

Golf Town Sees 15% Annual Sales Increase

Golf Town saw 2006 sales increase 14.8% to CA$220.1 million ($194.1 mm) from CA$191.7 million ($158.4 mm) last year. The increase was due to the addition of three new stores in 2005 and four new stores in 2006 for a total of 28 as at December 31, 2006 as well comp store sales growth of 2.9%.

“We have delivered very strong results for unitholders, for the year,” said Stephen Bebis, President and Chief Executive Officer. “Looking ahead in 2007, we expect to open five new stores. 2007 should be an exciting year with the introduction of new technology in drivers and woods. The new square shaped drivers from Callaway Golf, Nike and others will help golfers hit the ball straighter.”

Gross profit as a percentage of sales also grew, from 33.8% in 2005 to 35% in 2006 due to better buying terms from our suppliers and lower inventory shrinkage expense compared to 2005.

EBITDA increased 22.2%, from CA$20.3 million ($16.8 mm) in 2005 to CA$24.8 million ($21.9 mm) in 2006, and earnings increased 24.0% from CA$12.9 million ($10.7 mm) to CA$16.0 million ($14.1 mm) in 2006.

Net income for the year – before taxes and minority interest – increased, from CA$14.8 million ($12.2 mm) in 2005, to CA$18 million ($15.9 mm) in 2006, an increase of 21.6%.

Golf Town total sales for the fourth quarter ended December 31, 2006 advanced 16.4% from CA$32.4 million ($27.6 mm) in 2005 to CA$37.7 million ($33.1 mm) in 2006. As a percentage of sales, gross profit rose from 33% in the fourth quarter of 2005 to 37.6% in the quarter ended December 31, 2006.

In addition to advances in revenues and gross profit, Golf Town's EBITDA also increased from CA$0.1 million ($0.1 mm) in the same quarter last year to CA$1.5 million ($1.3 mm) in the fourth quarter ending December 31, 2006. Strong advances in EBITDA occurred as a result of higher gross margins on product; particularly on golf clubs.

“Golf Town's consistently strong performance since the public offering in the fall of 2004 has enabled the Trustees to implement three increases to unitholder distributions in 2006 alone, most recently for the month of November 2006,” added Bebis. “Even so, on the basis of the trailing 12 months, Golf Town's payout ratio was 66.6 per cent or $1.20 per unit annualized, which we believe is conservative.”

“Golf in Canada is a big business,” added Bebis “and Golf Town is uniquely positioned to serve this market and uniquely positioned to benefit from it. There is a great deal of growth available to us.”

Bebis also commented, “Our mission is to serve golfers and capture their investment in the game. As our 2006 results demonstrate, we continue to be successful in this mission. As we have stated since our fall 2004 initial public offering, our top priority is to balance growth with sustainability. We are doing so.”

    Consolidated Financial Statements

	    Golf Town Income Fund
	    CONSOLIDATED STATEMENTS OF
	    INCOME AND RETAINED EARNINGS (DEFICIT)
	    (in thousands of Canadian dollars, except per unit amounts)

	    For the year ended December 31,                         2006        2005
	                                                               $           $
	    -------------------------------------------------------------------------

	    Sales                                                220,099     191,725
	    Cost of sales                                        142,916     126,940
	    -------------------------------------------------------------------------
	    Gross profit                                          77,183      64,785
	    Expenses
	    Selling, general and administrative                   52,396      44,477
	    -------------------------------------------------------------------------
	    Income before amortization, interest and taxes        24,787      20,308
	    Amortization of fixed assets                           3,917       3,510
	    Amortization of deferred financing costs                 117         117
	    Amortization of pre-opening costs                        488         197
	    Amortization of intangible assets                        431         431
	    Interest on long-term debt                               910         766
	    Other interest                                           917         518
	    -------------------------------------------------------------------------
	    Income before income taxes and minority interest      18,007      14,769
	    Provision for (recovery of) income taxes -
	     current (note 11)                                      (956)      1,107
	    Provision for income taxes - future (note 11)          2,911         931
	    -------------------------------------------------------------------------
	    Income before minority interest                       16,052      12,731
	    Minority interest recovery                                 -        (214)
	    -------------------------------------------------------------------------
	    Net income for the year                               16,052      12,945
	    Deficit, beginning of year                            (1,196)     (1,318)
	    Distributions declared in the year (note 10)         (14,011)    (12,823)
	    -------------------------------------------------------------------------
	    Retained earnings (deficit), end of year                 845      (1,196)
	    -------------------------------------------------------------------------
	    -------------------------------------------------------------------------
	    Net income per trust unit
	    -------------------------------------------------------------------------
	      Basic (note 12)                                       1.29        1.06
	      Diluted (note 12)                                     1.28        1.02
	    -------------------------------------------------------------------------
	    Weighted average number of units
	     outstanding (in thousands)
	    -------------------------------------------------------------------------
	      Basic                                               12,453      12,215
	      Diluted                                             12,501      12,501
	    -------------------------------------------------------------------------
	    -------------------------------------------------------------------------

About The Author

Teresa Hartford

Teresa Hartford Editorial & Creative Director | SGB Media teresa@sgbonline.com | 704.651.5741

Archives

Categories

Pin It on Pinterest

Share This