Dick's dropped in bunker by golf slump

A slump in the number of Americans playing golf forced sports retailer Dick's Sporting Goods to announce $20.4m of pre-tax charges and warn about the long-term future of the golf retail business.

Ed Stack, chairman and chief executive of the Pittsburgh-based company founded by his father Dick Stack and which has over 570 stores across the US, said: "We just think that, as much as we all love golf, the business reality is that golf from a business viewpoint is under pressure."

The group is now restructuring its golf division, part of which involves laying off around 500 PGA professionals who offer lessons and advice on golf equipment in its stores.

Mr Stack told analysts: "I think golf from a participation standpoint and how it translates into retail is in a structural decline. We don't see that changing. We don't know when it will flatten out."

Severance costs will total £3.7m, while there is a $14.3m impairment charge on trademarks and store assets in the golf business and a £2.4m writedown of golf-related inventory.

The back office and buying operations of Golf Galaxy, the company's standalone golf retail operation which it bought eight years ago and comprises 85 stores, will merge with the main business.

Bricks-and-mortar US golf retailers are struggling with a fall in numbers playing the game, down 400,000 in the past year, according to the Florida-based National Golf Foundation, which promotes the game in the US.

They also face pressure from players who balk at the high costs of equipment, leaving the market saturated with inventory, and increasing competition from online retailers.

UK retailer Mike Ashley, whose Sports Direct group leads the UK sports goods market, in July took a stake in online retailer Direct Golf.

Dick's golf-related problems mirror those at Adidas. The sportswear group earlier this month reported a 22 per cent slump in second-quarter net sales at TaylorMade, its golf subsidiary.

Adidas is also planning to restructure its golf business, leaving it with an expected hit of €60m to second-half operating profits.

Mr Stack said Dick's would continue to support golf "the best we can", but added that it would make up a smaller proportion of its sales.

"Golf was a few years ago 20 per cent of our business. It's sitting at around 15 per cent and over the next three to four years it cold move to 10 per cent, just as other areas are continuing to grow," he said.

Discounting the golf-related charges, Dick's made second-quarter income of $81.7m, compared with $88.9m for the same period last year.

Net sales for the group grew 10.3 per cent to $1.7bn, with same-store revenues up 3.2 per cent. Dick's had previously said sales would be 1-3 per cent higher. Golf Galaxy sales fell 9.3 per cent.

It gave full-year guidance for earnings per diluted share of £2.70 to $2.85, excluding the restructuring charges.

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