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Golfsmith Chairman pleased with second quarter results

06
Aug '08
Golfsmith International Holdings Inc announced financial results for the second quarter of fiscal 2008 ended June 28, 2008.

Second Quarter Highlights:
- Net revenues increased 4.0 percent to $130.0 million for the second quarter compared with net revenues of $125.0 million for the second quarter of fiscal 2007. The increase includes net revenues from 12 net stores opened in fiscal 2007 and a 0.5% percent increase in comparable store sales, partially offset by a 9.3 percent decrease in net revenues from the direct channel.
- Operating income totaled $10.4 million compared with $7.7 million in the second quarter of fiscal 2007.
- Net income totaled $8.6 million, or $0.54 per diluted share, based on 16.0 million fully diluted weighted average shares outstanding. This compares with net income of $6.8 million, or $0.43 per diluted share, based on 15.8 million fully diluted weighted average shares outstanding for the three-month period ended June 30, 2007.

Martin Hanaka, chairman and chief executive officer of Golfsmith commented, "We were pleased with our second quarter results, especially considering the state of the consumer and a promotional sporting goods sector.

Through selective promotions and prudent inventory investments, we achieved slightly positive same-store sales and net income growth of 26%.

Looking ahead, we will continue to focus on controlling our expenses and managing our inventory, as well as executing on carefully managed promotions to drive sales.

While we are planning conservatively for the second half, we continue to expect our 2008 earnings to show meaningful improvement compared to 2007.”

Year-to-Date Results:
- Net revenues increased 3.2 percent to $209.2 million compared with net revenues of $202.7 million for the six-month period ended June 30, 2007. The increase was due to net revenues from 12 net stores opened in fiscal 2007. This increase was partially offset by a 10.2 percent decrease in net revenues from the direct channel and a 2.9 percent decrease in comparable store sales.
- Operating income was $5.2 million for the six-month period ended June 28, 2008, compared with operating income of $3.8 million for the six-month period ended June 30, 2007.
- Operating results included a $1.8 million charge, or $0.11 cents per share, incurred in the first quarter of 2008 which was related to restructuring costs, severance and search fees associated with organizational changes.
- Net income totaled $3.1 million, or $0.20 per diluted share, based on 16.0 million fully diluted weighted average shares outstanding. This compares with net income of $1.9 million, or $0.12 per diluted share, based on 15.9 million fully diluted weighted average shares outstanding for the six-month period ended June 30, 2007.
- During the first quarter, the Company closed two older format stores, associated with the acquisition of Don Sherwood Golf & Tennis, as leases expired. The Company plans to open one store in the third quarter of fiscal 2008, which will replace these locations.

As of June 28, 2008, total inventory was $101.1 million as compared to $102.5 million on June 30, 2007 and average comparable store inventory declined 3.2%.

Outlook:
For Fiscal 2008, Golfsmith continues to expect overall sales growth to be slightly positive with slightly negative comparable store sales.

Earnings growth will be driven by reduced operating expenses and marketing costs as well as lower pre-opening costs.

Golfsmith International Holdings Inc
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