Who Wants to Own a Golf Equipment Company?
I wouldn't.
Golf equipment isn't a very good investment these days. Look at Callaway. It's stock has dropped 20% since July ($15.71 vs. $19.49), Golfsmith has faired even worse crash-diving 47% ($5.77 vs $10.95).
Two articles came to my attention on the golf equipment business recently:
Cleveland Sale Appears Imminent and
Huffy Corporation Sells Tommy Armour. Both appeared in GolfWeek Business. For leveraged buyout groups like the one that is selling Cleveland and the sporting goods conglomerate that is unloading Tommy Armour, golf isn't fitting into their idea of making a profit.
Quicksilver, the current owner of Cleveland because of its acquisition of Rossignol skis in 2005, wants to dump it because the parent took its first annual loss in 15 years. Huffy, which acquired Tommy Armour, TearDrop, Ram, and Zebra when it purchased extreme sports manufacturer Gen X in 2002, later emerged from bankruptcy in 2005 and no longer thought golf fit into its future plans. Rumors are that Cleveland could be a TaylorMadeAdidas target, but nothing is official.
Last year it was
sporting good retailers consolidating. Is 2007 the year for golf equipment manufacturers?
Labels: Callaway, Cleveland, Golfsmith, Golfweek, TaylorMade, Tommy Armour
CLICK HERE to listen.In Episode #38 of Golf Gear News, host Bruce Stasch reports at The Newstand on
Duval Wimps Out at the British Open, and
Virginia Tech Student wins British Amateur.
In the State of the Game we hear about the golf industry's
Charity Golf Event Addiction.
The Guru Rants about
Golf Ball-sized Hail.In She Golfs Too we follow
Natalie Gulbis for a Day.Visit the Component Corner where you can get your very own
Starship Enterprise Putter.We return to Afghanistan's capital Kabal to visit the
World's Most Dangerous Golf Course. Finally, Golf of the Weird learns about a Minnesota Grand Theft Golf Cart Case.
As always, our show is sponsored by
Golfknockoff.com.
Check out our new
Media Kit.
Labels: British Open, David Duval, Golf Ball-sized Hail, Golfsmith, Natalis Gulbis
Golfsmith Expands its Virtual Footprint
Golfsmith, the leading golf equipment retailer is now providing the underpinnings of the EPSN.com website. They will be the official golf and tennis supplier of EPSN.com and will provide all the marketing, sales, fulfillment and administrative support as well as 30,000 golf and tennis products to the site’s 18 million monthly visitors. This is part of an ongoing effort by
EPSN.com to capture more of their site visitors’ retail spending.
What I found interesting was that Golfsmith, without the need to open a new bricks and mortar store, can expand its online footprint. Like Amazon.com, which provides content and infrastructure and fulfillment to other websites like
Borders.com and
Target.com, Golfsmith is re-purposing its entire inventory to another audience, thus growing its incremental sales without having to make a huge investment. Likewise, ESPN.com can offer more "value", in this case an online retail store, to its site visitors with little financial investment.
According to Alexa.com, the site ranking website, ESPN.com is the 38th most visited site on the web, while
Golfsmith.com is at 15,559th. In comparison,
GolfGalaxy.com is 96,559th and
Dick’s Sporting Goods leads the pack at 7,127th.
Generally, online deals of this nature have a payout to a site like ESPN.com of 10-20% of gross sales. This seems like a win-win for both players in a slow growth market and another arena that a Golf Galaxy or a Dick’s Sporting Good should be playing in.
Labels: Dick's Sporting Goods, ESPN, Golf Galaxy, Golfsmith
Dick’s Buys Golf Galaxy. Let the Consolidation Begin.
I had
written in April that Dick’s had opened a prototype concept store called simply The Golf Shop. Now, it appears that Dick’s didn’t want to wait to see how it would perform. Instead they went out and
bought Golf Galaxy for $225 million.
According to Edward W. Stack, chairman and CEO of Dick’s, he believes that the industry is ripe for consolidation, that’s why they swooped in and grabbed Golf Galaxy. With a sluggish industry firmly in a recession, some analysts wonder why Dick’s is willing to invest so much in the golf retailing space.
Dick’s Sporting Goods, with 300 stores and over $2.5 billion in sales, can afford to pick up Golf Galaxy and add its $250 million in sales to the balance sheet. They also will have more leverage with suppliers than Golf Galaxy did. Dick’s also has its own private label products and the Ben Hogan golf line that they can add to Golf Galaxy’s offerings.
What this is going to mean to the industry is that smaller retailers like GolfUSA, Golf, Etc., Nevada Bobs and others will continue to struggle and that franchised shop in your town might close. A small chain made up of independent franchised stores cannot compete with the better funded big box players. A Golf Galaxy or Golfsmith might have a 20-30,000 square foot store while a GolfUSA might have 2500 square feet.
Yet, these companies are not the competitors that Dick’s is worried about. It’s
Golfsmith. With 62 stores and a strong balance sheet coming off an IPO, Golfsmith is the only pure golf retailer that Dick’s has to worry about.
As odd as this might sound, I believe that Golfsmith is a candidate for a takeover by one of the bigger fish in the sporting goods arena. With less than $400 million in sales, it might make a nice addition to
The Sports Authority and their head-to-head, dog-eat-dog competition with Dick’s Sporting Goods.
Labels: Dick's Sporting Goods, Golfsmith, Retailing, Sports Authority
Dick's Sporting Goods Opens Golf Store
I early spoke about the
pending Clubbuilding War between
Golfsmith and
Golf Galaxy. Well, now there's a third big box player emerging
Dick's Sporting Goods.
Very quietly, this major sporting goods retailer has seen how nicely golf fits into it own niche that they have recently rolled out a new specialty golf store appropriate called The Golf Shop.
The store is located in Robinson, a suburb of Pittsburgh and will occupy a former 36,000 square foot Media Play location. Golf merchandise is one of Dick’s store-within-a-store departments and they already private label a line of golf equipment under the Walter Hagen name so a complete store from this sport retail giant doesn't seem too far off the mark.
The
Pittsburgh Business Times quotes Mitchell Kaiser, a retail analyst with Piper Jaffray and Company, as saying that Dick's, by having a stand-alone shop, will have access to higher-end clubs and the hope is that more retiring baby boomers will help to reinvigorate a flat golf industry. The major sporting goods chains only represent 10% of the $7 billion dollar equipment industry.
Now with three well-funded public companies vying for the golf equipment market (Golfsmith just announced an IPO and Golf Galaxy and Dick's Sporting Goods are both public companies) expect some major changes in golf retailing with major pricing pressure on the brand name club manufacturers and smaller retailers like GolfUSA and Nevada Bob's feeling the heat to innovate or die.
Labels: Dick's Sporting Goods, Golfsmith, Retailing
