The Sportsman's Guide, Inc. saw the Internet play an even bigger part in the sales increase for the third quarter. Internet and catalog sales grew as a percentage of base business sales, reaching 41% of sales in Q3 versus 36% in the year-ago period, and the company said the majority of sales at the recently-acquired Golf Warehouse business were Web-based.
Total sales increased 31.2% to $56.6 million, compared to $41.2 million in Q3 last year. Bases business sales increased approximately 8% from last year to roughly $44.5 million, which would indicate Golf Warehouse sales were in the neighborhood of around $12.1 million for the quarter.
Gross margins decline 140 basis points due to the inclusion of “traditionally lower” margin Golf Warehouse sales. The GM for the base business was lower as well, due to competitive pricing and a promotional market.
Net income jumped 50.6% to $1.1 million, or 20 cents per diluted share, for the quarter, compared to $710,000, or 13 cents per diluted share, for the year-ago period.
SGDE acquired The Golf Warehouse and its TGW.com business in June 2004 for a purchase price of $30.7 million. Total cost of the deal was roughly $31.3 million including transaction costs. The deal was funded with $16.8 million in cash and $14.5 million in debt financing. Management said they acquired $3.0 million in net assets in the deal, with the balance of the purchase price going to intangibles.
For the full year, SGDE sees earnings in the range of $1.38 to $140 per diluted share on sales between $225 million and $228 million.