Golf just isn't in the swing of things these days.

As yet another reminder of the lagging industry, golf gear seller Golfsmith (NASDAQ:GOLF) recorded a 5.5% decline in same-store sales. It was able to record higher revenues only because it opened 10 new stores last year.

Flagging golf club sales and one-time costs associated with its IPO last June caused Golfsmith to shank it into the woods. Since its debut, the stock has gone nowhere. The 6 million shares opened that day at $11.50 each but closed at $11.31 per share. Today it trades at just above $11 a stub. Not exactly an auspicious start.

It then had the luck of going public just as the golf market was flagging. As we've seen over the past few weeks, a number of golf-related stocks have felt the pain of a stagnant industry. Club shaft maker Aldila (NASDAQ:ALDA) felt the sting as branded and co-branded clubs continued their dramatic decline in favor of lower-cost stock shafts, while golf apparel manufacturers Ashworth (NASDAQ:ASHW) and Cutter & Buck (NASDAQ:CBUK) unraveled on slower sales. Combined with essentially flat numbers of rounds played, it's easy to see why Golfsmith is having a tough time of it.

While the company was able to narrow its loss from the year before down to $1.6 million in the quarter, for the year, things were much worse. For 2006, Golfsmith lost $7 million compared to a $3 million profit in 2005, as lower-margin products, aggressive promotions, and several one-time fees -- $15 million alone related to its IPO -- dragged things down.

Competition has remained fierce as well. Golf Galaxy, gobbled up by Dick's Sporting Goods (NYSE:DKS), has been expanding, and the company also faces threats from mass retailers like Target (NYSE:TGT) and Wal-Mart (NYSE:WMT). It's hoping that the slight uptick registered in rounds played this year will translate into greater growth and increased same-store sales between 1.5% and 3% in 2007. It also predicts it will be profitable for the year.

That might be easier said than done. While absent, the one-time costs would presumably have made Golfsmith a money-maker this go round. But the company still faces the same industry conditions and a push by manufacturers to keep costs and prices low. It's expanding its tennis presence and growing out its clothing lines, but the experience of Ashworth and Cutter & Buck ought to make it clear that that route assures nothing. At the least, it will mean lower margins across the board.

Breaking into the golf business -- even for an established, 40-year old retailer like Golfsmith -- can be as frustrating as trying to achieve par on the links.

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Fool contributor Rich Duprey owns shares of Wal-Mart but does not own any of the other stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.

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