Goldsmith's Net Loss Narrows

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On March 3, 2009, Golfsmith International Holdings ( GOLF) reported that its Q4 FY08 net loss narrowed to $6.49 million or $0.40 per share from $46.70 million or $2.95 per share in Q4 FY07. Net loss shrunk as a result of an income tax benefit and lower impairment charges. The latest quarterly consensus estimate was a loss of $0.30 per share.

During the quarter under review, GOLF's revenue decreased 14.1% year-over-year to $67.84 million from $78.97 million, due to a 17.3% drop in comparable store sales and a 23.0% decrease in net revenues from its direct channel.

During the quarter ended January 3, 2009, gross profit margin plummeted 414 basis points to 30.75% from 34.89% in the same quarter of the previous year, despite an 8.6% decline in cost of goods sold. Selling, general, and administrative expenses were down 9.6% to $26.99 million from $29.85 million. Subsequently, operating margin improved to a negative 9.72% from a negative 57.75%. Meanwhile, total inventory as on January 3, 2009, was $90.50 million compared to $98.50 million on December 29, 2007, while average store inventory decreased 8.0%.

Recently, the company's senior vice president and chief financial officer, Virginia Bunte, resigned effective March 3, 2009 to pursue other interests. The company's chief operating officer, Sue Gove, will serve as interim CFO.

For FY08, Golfsmith International's total revenue inched down 2.4% to $378.77 million from $388.16 million, reflecting a 6.3% decrease in comparable store sales and a 13.1% drop in net revenues from the company's direct channel. Moreover, net loss contracted to $515,611 or $0.03 per share from $40.82 million or $2.58 per share in FY07.

GOLF projects Q1 FY09 same-store sales to drop into the mid to high teens. During FY09, the company expects sales to fall to the mid- to high- single digits.

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