Golfsmith International Holdings (GOLF)

Golfsmith International Holdings, Inc., (NASDAQ: GOLF) today announced financial results for the fourth quarter and fiscal 2009 ended January 2, 2010. The fourth quarter of fiscal 2009 represented a 13-week period compared to the fourth quarter of fiscal 2008, which was a 14-week period.

Fourth Quarter Highlights:

• Net revenues totaled $63.8 million as compared to $67.8 million in the fourth quarter of 2008; comparable store sales increased 0.9% while sales from the Company’s direct-to-consumer-channel decreased 21.3%. Total net revenues represent 13 weeks in 2009 as compared to 14 weeks in 2008. Comparable store sales are calculated on a 13-week basis for both quarters presented.
• Operating loss totaled $6.4 million for the fourth quarter of fiscal 2009 compared to a loss of $6.6 million for the fourth quarter of fiscal 2008.
• Net loss for the fourth quarter of fiscal 2009 totaled $6.3 million or $0.39 per share. This compares to a net loss of $6.5 million or $0.40 per share for the fourth quarter of fiscal 2008.
• The Company ended the fourth quarter with $36.0 million of outstanding borrowings under its credit facility and borrowing availability of $16.1 million. This compares to $51.7 million of outstanding borrowings under its credit facility and borrowing availability of $5.9 million at January 3, 2009.

Fiscal Year 2009 Highlights:

• Net revenues totaled $338.0 million as compared to $378.8 million in fiscal 2008; comparable store sales decreased 7.9% and sales from the Company’s direct-to-consumer channel decreased 25.8%. Total net revenues represent 52 weeks in fiscal 2009 compared to 53 weeks in fiscal 2008. Comparable store sales are calculated on a 52-week basis in both fiscal years.
• Operating loss totaled $2.1 million for fiscal 2009 compared to operating income of $2.3 million for fiscal 2008. In fiscal 2009, the Company recorded a $0.4 million, or $0.03 per share, one-time litigation settlement charge and a $0.5 million, or $0.03 per share, non-recurring charge related to severance associated with organizational changes. In fiscal 2008, the Company recorded a $1.9 million, or $0.12 per diluted share, non-recurring charge related to severance associated with organizational changes.
• Net loss for fiscal 2009 totaled $3.5 million, or $0.22 per share. This compares to a net loss of $0.5 million or $0.03 per share for fiscal 2008.

Martin Hanaka, chairman and chief executive officer of Golfsmith commented, "While the economic environment remains challenging and uncertain, we are encouraged that sales trends have stabilized. Going forward, we will continue to maintain inventory discipline and cost controls while at the same time employing our previously stated initiatives to drive improved sales and earnings. Specifically, we plan to focus on improving the retail business with an increased emphasis on the Company’s selling culture and we plan to open four new stores in selective strategic locations in fiscal 2010. Also, we continue to be focused on ways to institute gross margin enhancements; refine the direct-to-consumer business; and execute operational excellence. We also anticipate continuing to generate positive free cash flow.”

Conference Call Information

The company will host a conference call today at 9:00 a.m. (eastern time) to discuss its fourth quarter and fiscal 2009 financial results. The call will be simulcast over the Internet at https://investors.golfsmith.com. A replay will be available for 30 days after the call at the aforementioned website. Telephone replays can be accessed for one month following the call by dialing 888-203-1112 (U.S.) or 719-457-0820 (international) and entering passcode 1530347.

About Golfsmith

Golfsmith International Holdings, Inc. (NASDAQ: GOLF), is a specialty retailer of golf and tennis equipment, apparel and accessories. The company operates as an integrated multi-channel retailer, offering its guests the convenience of shopping in more than 70 stores across the United States, through its Internet site and from its assortment of catalogs. Golfsmith offers an extensive product selection that features premier branded merchandise, as well as its proprietary products, clubmaking components and pre-owned clubs.

Cautionary Language

This press release contains forward-looking statements within the meaning of the federal securities laws. Statements that are not historical facts, including statements about the company's beliefs and expectations, are forward-looking statements. Forward-looking statements include statements preceded by, followed by or that include the words "may," "could," "would," "should," "believe," "expect," "anticipate," "plan," "estimate," "target," "project," "intend," or similar expressions. Forward-looking statements are not guarantees of performance. These statements are based on management's beliefs and assumptions, which in turn are based in part on currently available information and in part on management's estimates and projections of future events and conditions. Important assumptions relating to the forward-looking statements include, among others, assumptions regarding demand for the products, the introduction of new product offerings, store opening costs, the ability to lease new sites on a timely basis, expected pricing levels, the timing and cost of planned capital expenditures, competitive conditions and general economic conditions. These assumptions could prove inaccurate. Forward-looking statements also involve risks and uncertainties, which could cause actual results that differ materially from those contained in any forward-looking statement. Many of these factors are beyond the company's ability to control or predict.

The company believes its forward-looking statements are reasonable; however, undue reliance should not be placed on any forward-looking statements, which are based on current expectations. Further, forward-looking statements speak only as of the date they are made, and the company undertakes no obligation to update publicly any of them in light of new information or future events.