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  • Another large golf retail equipment company bites the dust ?

DC300

I see the decline of the golf component industry has many cause.
The millennium generation is a generation of disposable generation, in that, they use stuff and throw it in the dumpster, they either not interested in fixing things for reuse or do not know how. A generation growing up had things handed to them on the silver plate. Their logic path is the search the internet and trust what they had found with other's opinion.

My father's generation and my own will fix things up not just to save money but it's a joy of seeing the continuing service of older equipment. Younger generation will Google the pricing and dispose of the older equipment simply because it's "cost effective", even when the older equipment were still functioning.
Also they are counting on "help" from the government and the family members to get them through tough times.

The joy of tinkering with golf components is not just saving a few buck in the old days. The joy of making something and believing it's superior to the off the shelf stuff was a big factor for golfers to learn the basic of golf club making. It's too much work for the majority of younger golfer and it's " not cost effective" and does not work for "show and tell" to their peer. OEM name brand sparking better, like the Titleist golf balls are the best because it's the most expensive and a lot of professional golfers endorsed it.

Unless the OEM equipment turn higher price point, the golf component world will stay quiet for a long time.

    Golfsmith has over $200 million in loans, be it from vendors, lease agreements, etc. Bankruptcy protection might not be enough given the stature of their debt. As a result, rumors are flying that Dick's Sporting Goods might be posturing to make an offer to purchase the US-based territories in the coming weeks. Dick's stock increased 2.4% immediately following the announcement that Golfsmith was filing for bankruptcy.

    My overall take on the matter: Dick's would be assuming a lot of risk, placing a lot of eggs in the interest-is-sure-to-increase basket with absolutely no data suggesting otherwise. I mean - it's one thing to make a sizable investment knowing that the risks could at the very least be offset in the short-term while waiting for the silver lining to reveal itself longterm, but again - there's essentially no reliable proof anywhere that suggests this to be the case. After all - it was less than two years ago when Dick's announced they too were in the downsizing mode, cutting over 500 PGA professionals from their staff and since then nothing has changed, except more companies getting out of the hard-goods business.

    As appealing as the potential buy-out might appear in theory, Dick's would be wise to pay more attention to the sobering market data.

    If, of course, there is any truth to the rumors going around....

      And now you can add Wishon Golf getting acquired to the list of changes in the golf equipment industry. Right when they started to make a global name for themselves with the introduction of the Sterling irons. Well, I guess if you're going to get out it's best to do it while you're on top and not wait til you're forced out at the bottom like most do!

        PA-PLAYA My overall take on the matter: Dick's would be assuming a lot of risk

        Yes you're 100% right . If they keep the current business model left by G.S. But then again, if one need to revamp the whole business model then, why buy someone with such huge debt already in place ? It costs less to start anew if Dick's want to expand into other segment of the business, Buying a failed business model with huge assumable debt is - pretty dumb. The only reason anyone would do that is when they need the write off from the profit gained. I don't believe Dick's could benefit from the write off.

          customgolfcenter

          Yes, Barney Adams got out at the tail end. He could, get back into the thicket of things IF, situation turns around.

          Extra ordinary times create extra ordinary results. Even the so called "experts" have no clue and could only manipulate numbers. This extraordinary time we're in right now is very different than all the historical examples we had had in the past century. Hopefully we'll come out kicking.

            We need to look no further than TaylorMade's marketing approach.

            It worked for a few years. Increase product, increase product cycles, overwhelm competitors with saturating the market with more available in-store inventory. If you go back in the finances, you can see where the tide started turning against them. In 2009, shortly after the initial onslaught of the impacts of the global recession, they maintained course.

            What they essentially did was no different than a fishing boat captain out in the Atlantic, who was being told well ahead of time - turn back - there's a major storm heading right for you - yet he ignored the warning.

            The vital signs of the golf industry are essentially foretold in the number of rounds played per year, and the number of golf courses that are being built versus closed each year. Those numbers haven't been good for several years now, it's safe to say that despite people like us - fewer people are playing or buying equipment, more courses have closed than new ones opened.

            Dick's might have a great reason behind purchasing Golfsmith, providing the rumors are true... but ultimately the short-term gains will be killed by long-term results. The data isn't predicting a looming storm any longer... the data is displaying an actual storm that has already reached landfall and everyone missed the opportunity to get out ahead of time. So you either ride it out and eat your losses or go down with the rising tide.

            You don't build a bigger boat. That "ship" sailed a long time ago.

            Golfsmith has been going down the tubes ever since the Paul's sold out. The push into retail, basically abandoning the club builder in favor of the OEM and soft goods, with all the overhead associated with brick and mortar killed off the company - they just didn't see it. Too much growth, too fast, with too much debt. Then purchasing of Lynx, MacGregor, Killer Bee, Snake Eyes, Golfsmith, XPC, Zevo, ZTech, Tour Trek, Profinity and MaggieLane brands - more debt, no return on investment. Then all the innovators left - Wishon, et al - to me that was the real end of Golfsmith. If Dick's were to purchase the bones of Golfsmith it would signal the beginning of the end for them as well - too much debt to absorb and no upside.

            raggmann54 is right -- you see this with a lot of companies -- they chase growth at any price. Closely held companies, like Ping, can grow organically, since they're only beholden to the few. Once you're answering to many shareholders, or a parent company with many shareholders, it's very difficult. The big OEMs pushing out product lines 2-3 times a year hurt the component companies -- why buy a Snake Eyes driver head for $100 when you can get last year's OEM model brand new for $99? And when you think about the product cycle -- a lot of the non-clone component makers work in multi-year cycles and don't put out new models yearly, so the public will think that it's getting something newer buying last year's OEM.

            2 months later

            You could have knocked me over with a feather yesterday.
            As we were driving down Rt.17, Myrtle Beach, yesterday there was a giant banner announcing Going Out Of Business on the side of the Golfsmith Extreme store.
            G.O.B...Myrtle Beach, golf capital of the East Coast, 100 courses ?
            If you cannot survive as a golf retailer here then that business model is done.

            All I can say is wow...

            rob

              Golf Smith saw this coming with the OEM releasing the products into the market, hence the change of business model several years ago from component, club making business to OEM products.
              They jump out of the bear's grasp into tiger's mouth. The over inventory caused the dumping of the OEM products, fierce competition with online pricing ( many are the back office of the retail stores ). Gave up their unique lines of products and not able to compete with the same products everyone else carry.

              Tough to make a margin and tough to survive.

              We're going to visit my daughter in Columbus, OH tomorrow......sounds like I'd better hot-foot it down the street
              (about 3 miles) to the Golfsmith Super Store to see if they have any great bargains I HAVE to have!!!

                fatshot

                Good luck hunting !
                Our G.S. super store closed down more than 10 years ago.

                  The Paul's had to sell out as Carl and Barbara have a severely handicapped daughter and they want to assure her financial/needed services future thus they were advised to sell, take the money, and set up trusts (whatever) for her. Got to admire their doing so.

                  mainuh

                  I think the PGA Superstore pretty much owns Myrtle... and accessing their store is incredibly easy, with lots of visibility there literally right off the bypass. If it's the same Golfsmith store that I remember, it isn't nearly as accessible or overly visible for that matter.


                    I believe in this category of products and service the price line is the King.

                    When everyone offering the similar product and service, the cost of such will be the major consideration for most of the consumers. I for one, could careless of how the shop looks and even have to drive a few more miles to the location.

                    A very tough business, especially with the competition from internet store front, which is the back store of the brick and mortar stores. Kind of funny, because when I walked into the local stores, they either do not bargain for non advertised discount or they will match price ONLY with the other local brick and mortar stores.
                    However, when I check the internet sellers, many of these stores has the same product listed for either "auction" or less BIN price.

                    Tough to hold a profit margin when one could not offer different product than the rest. The price control from the OEM will be challenged in some ways and forms because price collusion is in the grey area of stepping over the line from a free market. Everything would be changed in another decade or two.
                    Some OEM had already leaning over having the demo site then ordering from the OEM site directly. Things to come in the future, retail would be phased out gradually. Demo and service center will replace the mom and pop retail stores.