“We Don’t Feel We’ve Found the Bottom”

Dick’s Sporting Goods CEO Ed Stack made the pessimistic assessment in the headline during a call on May 20 with financial analysts discussing the sharp drop in sales of golf equipment during the first quarter of the year at Dick’s and Golf Galaxy stores.

Stack’s full comment was, “The more concerning and unpredictable issue is the golf business. We anticipated softness, but instead we saw significant decline with Golf Galaxy down 10.4% and the Dick’s Sporting Goods golf business off by high single-digits. Our overall golf business missed our first quarter 2014 sales plan by approximately $34 million. We don’t feel we’ve found the bottom yet in the golf sales number.”

Now two months later, the company laid off more than 500 PGA Professionals marking a major retrenchment of the its efforts in the golf business. For the past several years a significant portion of every store’s floor space was devoted to the sport and almost every one of their approximately 560 stores had a PGA Professional on staff. The large merchandise display footprint (including hitting bays in many stores) and professional assistance were factors in Dick’s growth as an equipment seller, in many markets overwhelming small golf shops and on-course shops with aggressive advertising and service.

Stack also said in the call with analysts, "We are selling drivers in our stores this spring for $99 that were approximately $299 20 months ago,” and this was a big contributor to the financial results and there was no end in sight.

As an example, in comparison with first quarter 2013 Golf Galaxy and Dick's sold two percent fewer drivers, the most expensive club in a set. However in first quarter this year the price of drivers declined 16 percent and with golf accounting typically for 15 percent of company sales the impact was significant.

Overall sales for the first quarter of 2014 increased 7.9 percent to $1.4 billion and same store sales increased 1.5 percent, with Dick’s stores increasing 2.3 percent and Golf Galaxy decreasing 10.4 percent.

ED TRAVIS | Golf Opinion & Commentary

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