Golfsmith Q4 Revenues Slide 14.1%, FY08 Down 2.4%

Golfsmith International Holdings, Inc. saw net revenues of $67.8 million for the fourth quarter ended Jan. 3, 2009, a decrease of 14.1% from net revenues of $79.0 million the previous year. Net revenues reflect a 17.3% decrease in comparable store sales and a 23.1% decrease in net revenues from its direct channel. Comparable store sales are calculated on a 13 week basis for both quarters presented.

Operating loss totaled $6.6 million in the fourth quarter of fiscal 2008 compared to a loss of $45.6 million for the same period last year. Fiscal 2007 operating loss included a $43.0 million non-cash impairment charge to write-off goodwill and reduce the net book value of other long-lived assets related to the decline of the company’s stock price and market capitalization. Excluding these non-cash charges, operating loss in fourth quarter of fiscal 2007 would have been $2.6 million. Also, during the fourth quarter of fiscal 2008, the company performed an analysis of advertising costs related to its co-operative vendor programs resulting in the reclassification of $2.2 million of expense from cost of goods sold to selling, general and administrative. This resulted in a decrease in gross profit of 320 basis points.

Net loss in the fourth quarter of fiscal 2008 totaled $6.5 million, or a net loss per diluted share of 40 cents. This compared to a net loss of $46.7 million or, excluding the $43.0 million non-cash impairment charge, a net loss of $3.7 million or 23 cents per diluted share for the fourth quarter of fiscal 2007.

“Our fourth quarter results reflect ongoing challenges in the economic environment,” said Martin Hanaka, chairman and CEO. “Looking ahead to 2009, the retail environment remains difficult and we will continue to carefully control expenses, manage inventory levels and focus on cash preservation. We are also continuing our efforts to institute operational improvements, increase store productivity and enhance profitability, positioning our company for long-term sales and earnings growth.”

Net revenues decreased 2.4% to $378.8 million in fiscal 2008 compared to net revenues of $388.2 million in fiscal 2007. Net revenues reflect a 6.3% decrease in comparable store sales, and a 13.1% decrease in net revenues from the company’s direct channel. Total net revenues represent 53 weeks for 2008 compared to 52 weeks in 2007. Comparable store sales are calculated on a 52 week basis in both fiscal years.

 

Golfsmith reported operating income of $2.3 million in fiscal 2008. This compares to an operating loss of $36.9 million in fiscal 2007, including the $43.0 million non-cash impairment charge to goodwill and other long-lived assets. Excluding the impairment charge, operating income was $6.1 million in fiscal 2007.

The company reported a net loss for fiscal 2008 of $0.5 million, or a net loss per diluted share of 3 cents. This compares to a net loss of $40.8 million in fiscal 2007. Excluding the impairment charge, net income was $2.2 million or 14 cents per diluted share.

As of Jan. 3, 2009, total inventory was $90.5 million compared to $98.5 million at Dec. 29, 2007, and average store inventory declined approximately 8%.