As a precursor for its conference with ICR analysts, Golfsmith issued a press release recently announcing preliminary fourth quarter earnings estimated at $63.9 million as compared to $67.8 million in the year-ago period. Same store sales are expected to increase 0.9% while sales to the retailer’s direct channel are expected to decrease 21.2%.
In the ICR conference call, representatives for GOLF elaborated on growth initiatives outlined within the release. Notably, representatives said the company must gain a clearer understanding of climactic marketing and emphasized the importance of managing marketing costs and inventory in relation to the respective golf climate of stores locations. Likewise, management noted the importance of refining the direct business by building its online business. CEO Martin Hanaka said in the conference call that Golfsmith has been “(very) aggressive on growing the web and customer segmentation work is improving,” as well. Hanaka said although Golfsmith has the most visited website in golf, there are still improvements to be made, including implementing new software to better manage consumers’ email addresses as well as enhancing the web site with the help of a third-party partner
Additionally, Hanaka noted the importance of expanding GOLF’s brick-and-mortar locations, with four new stores slated for 2010. Likewise, EVP and COO Sue Gove said the company has directed focus on making retail stores more productive by changing the selling culture. Gove said Golfsmith has added training personnel to its locations while also revamping commission programs to drive certain categories. “We (have) found ourselves giving great service but not closing the sales,” Gove admitted, “That’s a critical focus for this coming year.”
GOLF has also reduced costs at its brick-and-mortar locations by rationalizing payroll spending and refining the full-time versus part-time balance of in-store staff. Other operational adjustments the company will make include improving the supply chain, focusing on better management of vendor relationships and continuing to concentrate on driving overall unit profitability.
Gove concluded the call by saying that sales trends for Golfsmith have stabilized in the fourth quarter. “We’ve got the infrastructure already in place to grow,” she said, “We’re estimating that this year made about $8 million EBITDA. Our target in three years is $33 million we think it’s very doable, and we think we’ve got the strategies in place to deliver that.”
