Dick’s Buys Golfsmith at Bankruptcy Auction

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Friday afternoon Reuters reported that Dick’s Sporting Goods (parent company of Golf Galaxy) won the Bankruptcy auction for struggling golf retailer Golfsmith.

The winning bid is believed to be in the $70 million ballpark.

According to that same report, Dick’s plans to limit operations to 30 Golfsmith stores. To put that number in perspective; before the bankruptcy announcement, Golfsmith operated 109 stores across the US.

Several have already been closed. It appears several more will suffer the same fate. Dick’s plans to retain approximately 500 Golfsmith employees.

While that’s not exactly good news, things could have been worse. One of the companies outbid by Dick’s was liquidation firm Yellen Partners. If its bid had been accepted, all remaining Golfsmith shops would likely have been shuttered, and the inventory sold off.

A Recovery of Sorts

We’d be remiss not to point out that just over 2 years ago, Dick’s downsized its golf operations. 500 PGA Professionals were fired, and golf department floor space inside stores was reallocated to higher margin categories.

More recently, Dick’s CEO Ed Stack has forecasted a rebound in the golf market, and the Golfsmith acquisition would seem to speak to that optimism. While it’s unclear if Dick’s will rebrand the remaining Golfsmith stores, the acquisition helps cement Dick’s place as one of the leading retail forces in golf.

The Big Picture

The demise of Golfsmith is just one in a larger series of events largely blamed on the decline of golf. And while that’s certainly true, the reality is, as it is with many things, the equipment industry has been slow to adapt to changing market conditions and the dip in participation (depending on which numbers you choose to believe).

There’s a bit more upheaval left to come as the golf industry seeks to define its new reality.

A Titleist IPO and an eventual sale of TaylorMade are expected to be the next major events on the business side of the golf equipment world. It’s becoming increasingly clear that the landscape is shifting dramatically and those companies that are best able to adapt will be the ones left standing when the dust finally settles.

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