Rough times for golf: Golfsmith files for bankruptcy
September 14, 2016 11:42 AM
(Bloomberg)—Golfsmith International Holdings Inc., the retailer of golf clothing and equipment, filed for Chapter 11 bankruptcy amid a slide in the sport’s popularity in North America.
The Austin, Texas-based company listed debt and assets of as much as $500 million each in Delaware court, and said it would try to sell part of the chain as a going concern while shutting some stores. If that fails, the company would liquidate, according to a resolution passed by Golfsmith directors and included in the bankruptcy court documents.
Managers were “directed to finalize and implement a going-concern sale and partial chain liquidation plan and, in the alternative, a full chain liquidation plan,” the resolution reads.
Golfsmith, which merged with Canada’s Golf Town in 2012 to become what it called the largest specialty golf retailer in the world, is owned by OMERS Private Equity Inc., part of the Ontario municipal employees’ pension fund. Golfsmith, which operates e-commerce sites Golsmith.com and GolfTown.com, is No. 218 in the Internet Retailer 2016 Top 500 Guide with 2015 estimated web sales of $125.9 million, according to Top500Guide.com.
The golf industry hasn’t recovered the popularity it enjoyed at the turn of the century, when Tiger Woods dominated the sport and attracted hordes of new fans. Millennials in particular haven’t embraced golf’s slow pace and time commitment. The number of U.S. players declined to 24.1 million last year from 25.7 million in 2011, according to the National Golf Foundation.
Nike Inc., No. 47 in the Top 500, has said it will no longer sell equipment for the sport, and Adidas AG (No. 66) is trying to offload most of its golf brands.
Golf is not going away at Dick’s Sporting Goods Inc. (No. 62). Executives for the sporting goods chain, which bought the web domain and other assets from now-defunct Sports Authority (No. 287), said during Dick’s fiscal second quarter earnings call in August that its Golf Galaxy omnichannel same-store sales decreased 4.3% and that it closed one Golf Galaxy store in the quarter ended July 31. Dick’s plans, however, to open two Golf Galaxy stores in the third quarter. “I think we are very well positioned and our golf business, we remain committed to our golf business,” CEO Edward Stack told analysts on the call, according to a SeekingAlpha transcript. “And understand, our golf business is profitable. It’s not a drag on earnings.”
Calloway Golf Interactive (No. 437), a subsidiary of manufacturer and retailer Calloway Golf Co., operates several e-commerce sites that sell golf balls, clubs, apparel and accessories. Its 2015 web sales were an estimated $38.0 million, up just 1.5% from $37.5 million in 2014, according to Top500Guide.com. Worldwide Golf Enterprises Inc. (No. 858) had $8.9 million in 2015 web sales, up less than 1% from 2014, Top500Guide.com says.
Sales at other golf merchants in the Internet Retailer 2016, however, have a higher arc. Web-only Golfballs.com (No. 594), sells new and used golf balls as well as new clubs, bags and other accessories. Its 2015 estimated web sales were $21.6 million with a five-year compound annual growth rate of 12.1%, according to Top500Guide.com. GolfClubs.com (No. 807) had Internet Retailer-estimated web sales of $10.63 million in 2015 and a five-year CAGR of 29.3%, while Golfland Warehouse Inc. (No. 976) had web sales of $5.1 million and a five-year CAGR of 43.6%, Top500Guide.com says.
The bankruptcy case is: In Re: Golfsmith International Holdings Inc. No. 16-12033, U.S. Bankruptcy Court, District of Delaware (Delaware)