Golfsmith International Holdings, Inc. net income fell in the second quarter of 2009 as increased promotional activity failed to drive consumer spending as much the retailer expected.  Second quarter revenues slid 11.7% to $114.8 million from $130.0 million a year earlier. The decline reflects a 9.5% decrease in comparable store sales and a 28.0% tumble in revenues from its direct-to-consumer channel. 
Net income slid 20.9% to $6.8 million or 42 cents a share. Operating income totaled $8.3 million compared to $10.4 million for the second quarter of fiscal 2008, a 20.2% drop.


Company chairman and CEO Marty Hanaka said they are gaining share in this down market and expect it to position them well when the market turns to the positive.  Hanaka suggested the golf specialty market will shrink from 1,670 doors last year to possibly 1,300 by the end of this year.  He referenced an analyst report that said 70% to 75% of golfers have postponed their equipment purchases for each of the last two years.  “…so when you put that pent-up demand together with the reduced stores and square footage, it puts us in a good place,” he said.

Traffic was said to be off mid-single digits and the average order value was off, but they sad they made up for it in converting traffic to sales.
Hanaka said the gross margin improvement for the quarter is sustainable and is sustainable in the next year or two as they keep improving mix.  He pointed to the launch of the new MacGregor products in Q4 which he said is going to be “margin rich” for the company.


GOLF relocated two of its existing stores in Q2 and closed one store due to an expiring lease. The company also signed a lease for a property in Irvine, CA for the opening of a retail store in the fourth quarter.