Golf just isn't in the swing of things these days.
As yet another reminder of the lagging industry, golf gear seller Golfsmith
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
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
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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