The Golf Business Is Terrible

The golf industry is weak, and it's hurting sales at retailers like Dick's Sporting Goods..

In the second quarter, sales at Dick's Golf Galaxy stores fell 9.3% on a comparable-store basis. This was actually worse than the 8.7% drop forecasted by analysts.

Dick's also said it would take a $20.4 million pre-tax charge related to restructuring initiatives in its golf business.

These charges include:

• A $14.3 million non-cash impairment of trademarks and store assets used in the Company's golf business;
• Severance charges totaling $3.7 million relating to the elimination of specific golf positions from the DICK'S stores, and from the combination of DICK'S golf and Golf Galaxy corporate and administrative functions; and,
• A $2.4 million write-down of golf-related inventory.

"We have consolidated our Golf Galaxy merchandising, marketing and store operations into DICK'S Sporting Goods," said Dick's CEO Edward Stack. "In addition, we have eliminated specific staff in our golf area within our DICK'S Sporting Goods stores. These changes are necessitated by the current and expected trends in golf. We will invest these cost savings into other aspects of our store operations and into the growth areas of our business."

Overall, the quarter wasn't bad for Dick's, which reported company-wide earnings and sales that beat expectations, and in morning trade on Tuesday, Dick's shares were up more than 5%.

This updated chart from Golf 20/20, which we highlighted earlier this year, shows that through June, rounds played in the U.S. are still down over last year.