Dick’s Sporting Goods Inc is not happy about its golf game. Reeling from a decline in its sales for months and mounting inventories the retailer believes the category will drop to only 10% of its overall business during the next 4 years from 15% in 2014 and 20% only a couple of years ago.
Golf, from a standpoint of participation and how that translates to sales in retail, is in decline and we are not expecting that to change, said the COO of the company Joseph Schmidt.
Instead, the retailer is looking to grow other categories. The company for example will devote additional space to youth and women’s apparel.
Dick’s said is profit for the fiscal second quarter was down 17% from the same period one year ago to $69.4 million, even though sales were 10% higher at $1.69 billion.
The company restructured its golf category, which cost over $20.4 million during the quarter that ended August 2, including charges of $3.7 million for severance.
In July, hundreds of people were laid off by Dick’s in its golf category amidst the weakening demand for the equipment, clothing and related accessories.
While its sales at same stores improved by 4.1%, they were down by 9.3% at the Golf Galaxy stores owned by the company.
The company saw its shares increased on Tuesday by 1.6% to end the day at $44.21, but their value has dropped by close to 25% thus far in 2014.
The move away from golf is astonishing for a retailer that during the last decade made huge efforts to increase its footprint in the golf industry.
The company acquired Golf Galaxy the specialty retailer in 2007 for a cost of $226 million. At the time it purchased the retailer, it increased its stores from 65 in 2007 to 85 today.
Dick’s said that two thirds of the store leases for Golf Galaxy would end over the next 36 months and it could close the locations that are underperforming.
The retailer at the same time is marking down its inventory in golf and hosting sales that are steep to clear Dick’s backlog of inventory.