Golfsmith International Holdings, Inc. saw net revenues increase 2.0% to $79.2 million for the first quarter compared with net revenues of $77.7 million for the first quarter of fiscal 2007. The increase includes net revenues from 13 non-comparable retail stores opened in fiscal 2007, partially offset by a 11.4% decrease in net revenues from its direct channel and a 8.4% decrease in comparable store sales.


Operating loss totaled $5.2 million in the first quarter compared with a $3.9 million loss for the first quarter of fiscal 2007.


Net loss totaled $5.4 million or a loss per share of 34 cents, based on 15.8 million fully diluted weighted average shares outstanding. This compares with a net loss of $4.9 million, or 31 cents per share, based on 15.7 million fully diluted weighted average shares outstanding in the three months ended March 31, 2007.


Operating results included a $1.8 million charge, or 11 cents per share related to restructuring costs, severance and search fees associated with organizational changes made in the first quarter, including the severance package provided to our previous CEO.


“Our first quarter results were slightly below our initial expectations due to lack of new product launches, a decline in rounds played and the challenging economic environment. In addition, in comparison to last year, there was the negative impact of the Easter shift, said Martin Hanaka, chairman and interim chief executive officer of Golfsmith.

 

“Looking ahead, we will continue to focus intently on expense controls, gross margin expansion, and improved inventory management. During April we experienced improved sales trends and now are more closely in line with expectations. As we stated in our last conference call, we expect the third and fourth quarters to be similar or slightly below last’s year’s respective quarter, while the second quarter should show meaningful improvement and our performance is still tracking to this expectation,” said Hanaka.

As of March 29, 2008, total inventory was $100.5 million as compared to $100.1 million on March 31, 2007 and average comp store inventory declined 7%.


Outlook:


For Fiscal 2008 Golfsmith continues to expect overall sales growth to be slightly positive with slightly negative comparable store sales and a decrease in direct sales. Earnings growth will be driven by reduced operating expenses and marketing costs as well as lower pre-opening costs.


 










































































































































































































































































Golfsmith International, Inc.
Consolidated Statement of Operations


(Unaudited)

 
Three Months Ended
March 29,   March 31,
2008 2007
Net revenues $ 79,235,496 $ 77,662,496
Cost of products sold   52,075,606     51,579,270  
Gross profit 27,159,890 26,083,226
 
Selling, general and administrative 32,335,834 29,351,900
Store pre-opening / closing expenses 28,144 630,766
   
 
Total operating expenses 32,363,978 29,982,666
   
Operating loss (5,204,088 ) (3,899,440 )
 
Interest expense (997,650 ) (983,490 )
Interest income 9,951 5,902
Other income 25,544 31,998
Other expense (18,983 ) (42,979 )
   
Loss before income taxes (6,185,226 ) (4,888,009 )
 
Income tax benefit (expense)   742,227     (20,982 )
 
Net loss $ (5,442,999 ) $ (4,908,991 )
 
Basic net loss per share of common stock $ (0.34 ) $ (0.31 )
Diluted net loss per share of common stock $ (0.34 ) $ (0.31 )
 
Basic weighted average common shares outstanding 15,839,215 15,730,759
Diluted weighted average common shares outstanding 15,839,215 15,730,759