Golfsmith International had net revenues of $85.5 million for the quarter ended October 1, 2005, up 15.7% from revenues of $73.9 million for the year-ago period. Operating income was $4.1 million, up 57.7% from last year's $2.6 million while net income more than doubled to $1.2 million from $0.5 million during last year's quarter.
The $11.6 million increase in net revenues from the three months ended October 2, 2004 to the three months ended October 1, 2005 was mostly comprised of a $8.4 million increase in non-comparable store net revenues and a $3.2 million, or 6.2%, increase in comparable store net revenues. In comparison, comparable store net revenues for the three months ended October 2, 2004 decreased by $3.5 million, or 7.9%. The company believes the increase in comparable store net revenues from the three months ended October 2, 2004 to the three months ended October 1, 2005 was due in part to the negative comparable results reported during the three months ended October 2, 2004. Additionally, the company believes the comparable store net revenue increase is influenced by the increase in the number of golf rounds played in the U.S. during the three months ended September 30, 2005 of 1.4%, as compared to the same period in 2004, as reported by Golf Datatech. Further, the company believes the comparable store increases were influenced by improvement in its post-sale product return rates. Non-comparable store net revenues include revenues from eleven stores in operation that were opened subsequent to October 2, 2004. Direct-to-consumer channel net revenues increased $0.3 million, or 1.4%, from the three months ended October 2, 2004 to the three months ended October 1, 2005. International net revenues decreased by $0.3 million, or 20.4%, from the three months ended October 2, 2004 to the three months ended October 1, 2005 due primarily to the sale of the rights to a trademark in fiscal 2004. Sales of products using this trademark contributed approximately one-third of international net revenues during the three months ended October 2, 2004 but did not contribute any international net revenues during the three months ended October 1, 2005.
For the three months ended October 1, 2005, gross profit was $29.9 million, or 34.9% of net revenues, compared to $24.5 million, or 33.2% of net revenues, for the three months ended October 2, 2004. Increased net revenues for the three months ended October 1, 2005 compared to the three months ended October 2, 2004 led to higher gross profit for the three months ended October 1, 2005. The increase in gross margin percentage was due to increases in vendor allowances, which resulted in higher margins, and to us realizing economies of scale due to continued retail store growth, which has allowed us to purchase products in higher volumes with more favorable pricing.
Selling, general and administrative expenses increased $3.5 million to $25.4 million for the three months ended October 1, 2005 from $21.9 million for the three months ended October 2, 2004. Increased selling, general and administrative expenses for the three months ended October 1, 2005 compared to the three months ended October 2, 2004 resulted from an increase in expenses of $3.1 million related to general operations for non-comparable retail stores, an increase of $1.0 million related to general operations for existing retail stores, offset by a decrease of $0.6 million related to general operations for corporate and international expenses.
Store pre-opening costs include costs associated with hiring and training personnel, supplies and occupancy and miscellaneous costs related to new store openings and are expensed as incurred. During the three months ended October 1, 2005, we incurred $0.3 million in store pre-opening expenses related to the opening of three new retail locations during the third fiscal quarter of 2005, consisting of two new stores and one relocated store. During the three months ended October 2, 2004, we incurred approximately $14,000 in store pre-opening expenses related to residual costs from the opening of four new retail locations during the first quarter of fiscal 2004.
Interest expense consists of costs related to Golfsmiths 8.375% senior secured notes and our senior credit facility with a financial institution. Interest expense was $2.9 million and $2.8 million for the three months ended October 1, 2005 and October 2, 2004, respectively. For further discussion, see “-Liquidity and Capital Resources -Senior Secured Notes” and “-Liquidity and Capital Resources -Credit Facility” below.
Other income for the three months ended October 2, 2004 was $1.1 million and related almost entirely to the sale of certain trademarks for Lynx in Europe, Malaysia, Thailand and Singapore to a third party in August 2004. We received proceeds of $2.1 million, net of direct costs associated with the sale, and recorded a gain on the sale of approximately $1.1 million. Other income was not material for the three months ended October 1, 2005.
We record income taxes, consisting of federal, state and foreign taxes, based on the effective rate expected for the fiscal year. Actual results may differ from these estimates. We did not record federal income tax expense for the three months ended October 1, 2005 due to a full valuation allowance being recorded. Income tax benefit of $21,121 during the three months ended October 1, 2005 represents foreign income tax benefit. Income tax expense was $0.3 million, or 37.9% of pre-tax net income, for the three months ended October 2, 2004.
