Golfsmith Swings to Q3 Profit on Solid Sales Growth

Golfsmith International Holdings, Inc. reported third quarter net revenues increased 8.3 percent to $101.0 million as compared to net revenues of $93.3 million for the third quarter of fiscal 2010. Net revenues reflect a 3.4 percent increase in comparable store sales and an 11.2 percent increase in net revenues from the direct-to-consumer channel.
 
Operating income for the third quarter was $1.8 million as compared to an operating loss of $1.1 million for the same period last year. The third quarter of fiscal 2011 included $0.6 million in charges for legal and other professional services incurred outside the ordinary course of business. The third quarter of 2010 included $1.6 million in charges related to store closings, asset impairment and lease termination costs.
 
Net income for the third quarter of fiscal 2011 totaled $1.3 million, or 8 cents per diluted share, as compared to a net loss of $1.1 million, or a loss of 7 cents per share for the same period last year. Excluding the store closing costs and other unusual charges, the company's net income for the third quarter of fiscal 2011 was $1.9 million, or 11 cents per share, as compared to $0.2 million, or a penny per share, for the third quarter of fiscal 2010.
 
As of October 1, 2011, the company had $35.4 million of outstanding borrowings under its credit facility and borrowing availability of $29.1 million. This compares to $42.6 million of outstanding borrowings under its credit facility and borrowing availability of $18.4 million at October 2, 2010.
 
As of October 1, 2011, total inventory was slightly higher than last year at $85.3 million compared to $80.7 million as of the third quarter of fiscal 2010. Comparable average store inventory decreased approximately 2.4 percent.

Martin Hanaka, Chairman and Chief Executive Officer of Golfsmith, commented, “We are extremely pleased with the continued momentum of our business. The operational and strategic initiatives that we have been instituting over the last three years have strengthened our foundation and enabled us to gain market share during a difficult economic period. We believe that we are on a solid growth trajectory.”

Year-to-Date Results

Net revenues were $312.7 million for the nine-month period ended October 1, 2011 as compared to net revenues of $279.0 million for the same period last year. Net revenues reflect a 7.4 percent increase in comparable store sales and a 12.8 percent increase in net revenues from its direct-to-consumer channel.
 
Operating income was $8.2 million for the nine-month period ended October 1, 2011 as compared to operating income of $0.9 million for the same period last year. Results for 2011 include $0.6 million in charges as previously mentioned, and $0.2 million in lease termination charges. Operating income for the nine-month period ended October 2, 2010 included the $1.6 million in store closing costs, as discussed above.
 
Net income for the nine months ended October 1, 2011 totaled $6.5 million, or 39 cents per diluted share compared to net income of $0.2 million, or a penny per diluted share for the nine-month period ended October 2, 2010. Excluding the above-mentioned charges, net income would have been $7.3 million or 43 cents per diluted share for the first nine months of fiscal 2011 as compared to $1.8 million, or 11 cents per diluted share for the same period last year.