Dick’s Sporting Goods (DKS) is disgusted with its golf game. As duffers leave the links en masse, the company is quitting as well.
It will still sell some clubs here and there, but its going to focus on serving more rewarding activities such as baseball, football, and mini-trampoline use. In the recent quarter, Dick’s took a $14.3 million impairment charge on its golf trademarks and wrote down $2.4 million worth of clubs, balls, and apparel. The company also forked out $3.7 million in severance, as it laid off almost all of almost 500 of its in-store golf pros in July and started folding some of its 79 stand-alone Golf Galaxy brand stores into its larger “Dick’s” locations.
“These changes are necessitated by the current and expected trends in golf,” Chief Executive Officer Edward Stack said in a statement on Tuesday morning.
Sales at Golf Galaxy locations that had been open more than a year slid 9.3 percent from the year-earlier period. All told, the sub-par golf results dragged Dick’s profit down by 17.5 percent, to $69.5 million.
Until about a decade ago, a company going all-in on golf would have been considered savvy. The sport has always attracted a pretty affluent demographic and the potential to sell ever-more expensive and intangible technological upgrades is virtually limitless. The new Callaway (ELY) Big Bertha Driver, which Dick’s sells—rather, tries to sell—for $400, has both a “Hyper Speed Face” and “Advanced Adjustable Hosel technology,” which is far better, one assumes, than standard Hosel. What’s more, fancy clubs like that need to be fitted, something that’s tough to do via the Internet.
But $400 buys a killer smartphone these days, and it’s hard to find four hours for a frustrating, grassy stroll when there’s so much work to be done and Candy Crush (KING) to be played. It’s also difficult to find time to putt around the course when one is training for a triathlon or one of those muddy, obstacle course races that are all the rage these days. Even cricket, apparently, is having a renaissance in the U.S.
The National Golf Foundation estimates that from 2003 to 2013, the number of golfers in the U.S. dropped by almost one-fifth. In the first six months of this year, the number of rounds played slid by 2.1 percent, according to Golf Datatech.
Earlier this year, Stack called Dick’s golf trade “unpredictable,” which is a dirty and dangerous word in any business. “We really don’t know where the bottom is,” he said on a conference call in May.
Dick’s, meanwhile, is blaming the slide, in part, on the decline of Tiger Woods. The company may be on to something. Nike (NKE), a longtime sponsor of Woods, has reported flat golf revenue in recent months, in part because it also has a long-term deal with Rory McIlroy, a 25-year old Northern Irishman widely considered the closest thing to Tiger 2.0.