Golfsmith International Holdings, Inc. reported second quarter revenues
slid 11.7% to $114.8 million from $130.0 million a year earlier. The
decline reflects 9.5% decrease in comparable store sales and a 28%
tumble in revenues from its direct-to-consumer channel.

Net
income slid 20.9% to $6.8 million, or 42 cents a share, from $8.6
million, or 54 cents, a year ago. Operating income totaled $8.3 million
compared to $10.4 million for the second quarter of fiscal 2008, a
20.2% drop.

As of July 4, 2009, the company had $28.0 million
of outstanding borrowings under its credit facility, borrowing
availability of $38.7 million, and total inventory of $93.1 million.
This compares to $34.6 million of outstanding borrowings under its
credit facility, $33.0 million of borrowing availability, and $101.1
million of inventory at June 28, 2008. Average store inventory declined
3.5 percent at July 4, 2009 as compared to June 28, 2008.

During
the second quarter of fiscal 2009, the company relocated two of its
existing stores and closed one store due to an expiring lease. The
company also signed a lease for a property in Irvine, California for
the opening of a retail store in the fourth quarter of fiscal 2009.

Martin
Hanaka, chairman and chief executive officer of Golfsmith commented,
“Our second quarter results reflect a sequential improvement in
comparable store sales and a year-over-year gross margin improvement.
We continue to closely manage expenses and inventory without
sacrificing product availability and have made significant improvements
from a year ago. Looking ahead, we will continue to invest prudently in
our customer experience initiatives and be innovative as we work with
our vendors to drive traffic in the second half of the year, since we
do expect overall trends in the golf industry to remain challenging. As
the industry continues to consolidate, we believe our Company is
positioned to capture additional market share, and we look forward to
resuming our store growth plans in fiscal 2010.”

Year-to-Date Results

Net
revenues were $183.6 million for the six-month period ended July 4,
2009 as compared to net revenues of $209.2 million for the six-month
period ended June 28, 2008. The decrease in total revenue was due to a
10.3 percent decrease in comparable store sales and a 26.7 percent
decrease in net revenues from its direct-to-consumer channel.

Operating
income totaled $2.9 million for the six-month period ended July 4, 2009
as compared to operating income of $5.2 million for the six-month
period ended June 28, 2008. The company recorded a $0.5 million
non-recurring charge, or 3 cents per diluted share, related to
severance associated with organizational changes in this year’s first
quarter. Operating results for the first quarter of fiscal 2008
included a $1.8 million non-recurring charge, or $0.11 cents per
diluted share, related to the same.

Net income totaled $1.7
million, or 10 cents per diluted share compared to net income of $3.1
million, or 20 cents per diluted share for the six-month period ended
June 28, 2008.

Golfsmith International Holdings, Inc.
Consolidated Statements of Operations







Three Months Ended
Six Months Ended


July 4,
June 28,
July 4,
June 28,


2009
2008
2009
2008


(unaudited)









Net revenues


$

114,796,870



$

129,994,600



$

183,589,774



$

209,230,096


Cost of products sold


74,719,386



85,310,115



120,741,824



137,385,721


Gross profit



40,077,484




44,684,485




62,847,950




71,844,375










Selling, general and administrative



31,650,261




34,167,492




59,468,190




66,503,326


Store pre-opening/closing expenses


175,054



81,223



523,280



109,367


Total operating expenses



31,825,315




34,248,715




59,991,470




66,612,693










Operating income



8,252,169




10,435,770




2,856,480




5,231,682










Interest income (expense), net



(314,723

)



(706,515

)



(791,863

)



(1,694,214

)

Other income (expense), net



(10,387

)



(5,089

)



46,363




1,472







Income before income taxes



7,927,059




9,724,166




2,110,980




3,538,940










Income tax expense


(1,145,355

)


(1,152,744

)


(455,589

)


(410,517

)








About The Author

Thomas J. Ryan

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

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