Due to a significant drop-off in direct sales and stiffening competition in the golf retail industry, Golfsmith International Holdings, Inc. struggled to generate sales growth for the third quarter.
Direct sales, which includes Golfsmiths, website and catalog operations, fell 11.6% for the quarter. Management said the difficult
macroeconomic environment had adversely affected the direct channel, because customers are staring to purchase pre-owned clubs instead of either new custom-fitted clubs or making their own clubs through club making products offered by retailers like Golfsmith.
Those attributions were in addition to the general slow down in club making that the industry has seen in the last few years. Management also noted that a growing retail base had encouraged more customers to visit stores to make purchases instead of utilizing the companys direct capabilities.
Management attributed the decrease in gross margins to increased promotional activity, as well as to an increase in lower margin products such as used clubs, electronic accessories and some brand name clubs.
“Sales trends slowed dramatically in September as the economic environment deteriorated and the hurricanes hit key areas of Texas and Florida,” said Martin Hanaka, chairman and CEO of Golfsmith, “Looking ahead, we will continue to focus on expense controls and inventory management as well as carefully execute promotions.”
