Golfsmith International filed its 10-K for 2004 last week, posting a net loss in the fourth quarter that erased all profits for the year. Based on calculations made by SEW, consolidated revenues for the fourth quarter declined 3.1% to $59.6 million, compared to $61.5 million in the year-ago period. Gross margins declined 270 basis points to 34.1% of sales from 36.8% in Q4 last year. SG&A, as a percent of sales, increased 190 basis points in the quarter to 36.5% versus 34.6% in the prior year period. The retailer posted a $7.4 million net loss for the period, a sharp increase from the $1.0 million loss posted in the year-ago quarter.
For the year, revenues increased 14.9% to $296.2 million, compared to $257.7 million in 2003. Comparable store sales rose 0.7% on top of a 7.4% comp gain in fiscal 2003. Domestic revenues increased 15.0% for the year to $289.6 million and International revenues rose 12.8% to $6.6 million in 2004.
A $41.5 million revenue gain was attributed to new stores and a $1.0 million increase in comp store sales, offset a bit by a 5.2% decrease in direct-to-consumer channel revenues. Total revenues benefited from eight new stores in operation at year-end as well as ten other stores that contributed to both comp and non-comp gains. The decline in direct revenues was primarily due to a decrease in catalog circulation and increased competition. Golfsmith said they believe the stagnation in comparable store revenues in 2004 was influenced by the 0.1% decrease in the number of golf rounds played in the U.S.
Gross margin improved 60 basis points for the year to 34.2% of sales versus 33.6% in the prior year. SG&A increased 210 basis points to 30.6% of sales versus 28.5% in 2003. The retailer posted a $4.8 million net loss for the year compared to $1.1 million in net income in the prior year.
The improvement in gross margin for the year was attributed to better pricing they received on product due to their increase in purchasing power. The increase in SG&A expenses was due to an increase in expenses related to 20 additional retail stores in operation and an increase in corporate and international expenses.
The retailers superstore format accounted for 69.0% of total revenues in 2004 versus 62.9% in the prior year. Golfsmith had 46 superstores in operation at year-end, up from 38 at year-end 2003. They plan to open eight to twelve superstores during fiscal 2005. One store in operation at year-end was closed in February 2005 due to the expiration of the lease term, but will be replaced by a new store in the same market this year.
>>> Golf rounds arent the only culprit here. You only have to look at the focus Golf is getting at Dicks and TSA to understand the bigger picture…
