Golfsmith International Holdings, Inc. reported net revenues for the third quarter ended October 2 increased 3.9% to $73.9 million compared with $71.1 million in the same period of the prior fiscal year. Same-store sales decreased 7.9% in Q3 compared to an increase of 12.6% in same store sales in the third quarter of fiscal 2003. The comp store sales decline, coupled with a 9.9% decrease in Direct-to-Consumer sales, offset the growth in new stores. International revenues were flat at $1.6 million for the quarter.

The company said comps were impacted by a 0.9% decrease in the number of golf rounds played in the U.S. during the third quarter of 2004, according to Golf Datatech. The decrease in Direct revenues was said to be primarily due to “decreased catalog circulation and increased competition.”

Gross margins improved 30 basis points to 33.2% of net revenues in Q3, compared to 32.9% of net revenues in the year-ago quarter, due primarily to new economies of scale that enabled the company to purchase product in “higher volumes and with more favorable pricing.”

In August 2004, Golfsmith sold its trademarks for the Lynx brand in Europe, Malaysia, Thailand and Singapore for $2.1 million, net of direct costs associated with the sale. The gain on the sale was approximately $1.1 million.

Operating income decreased 40.8% to $2.6 million, compared with operating income of $4.4 million in the third quarter of fiscal 2003. Net income was almost cut in half to $536,000 from net income of $1.0 million in the third quarter of fiscal 2003.

The retailer’s 42 Superstore formats, which range in size from 8,000 to 30,000 square feet, accounted for approximately 71.4% of net revenues for third quarter versus 67.2% of sales in the year-ago period. Golfsmith plans to open four additional Superstores in Q4, one each in Orlando, FL; San Diego, CA; and Livingston and Paramus, New Jersey. The retailer expects to spend approximately $1.3 million to open each additional Superstore, which includes pre-opening expenses, capital expenditures and inventory costs, and between $0.3 million to $0.5 million to retrofit selected superstores to the smaller store layout.

Golfsmith recently appointed a number of new managers, with Ken Brugh, current VP of real estate, appointed VP of store operations and real estate; Matt Corey appointed VP of marketing; Jerry Dent appointed VP of supply chain operations; and Shawn Luo hired as director of supply chain and inventory productivity. David Lowe, formerly from Top Flite, has been appointed director of proprietary brands; Randy Peitsch, formerly of Galyan’s, was added as senior buyer of pro-line golf equipment; and Jared Tanner was hired as director of Internet marketing from Cheaper Than Dirt!