Golf Galaxy Cuts Guidance

Profits for the quarter were up to $2.6 million, or 22 cents per share, rising from $695,000, or 21 cents per share, from the year ago period, when it paid out nearly $1 million for preferred stock dividends. Revenue for the quarter was also up 41 % to $82.5 million, from $58.6 million in the year ago period.

Sales at stores opened at least a yearwere up 1% during the quarter, marking the 13 consecutive quarter of positive comparable sales growth, the company said. Despite that increase, company officials said sales failed to meet expectations, primarily because of inclement spring weather in the north and Midwest that kept golfers off the links. Tentative consumer demand also had an impact on those numbers, officials said.

Yet despite lackluster sales, demand for services such as golf lessons and club repair, increased throughout all stores, growing from 3% to 4.7 %of all sales in the current quarter, Chief Operating Officer Gregory B. Maanum said Sales of apparel and accessories, primarily those for women, were also on the upswing.

The company expects second-quarter profit of between $6.8 million and $7.2 million, or 59 cents to 62 cents per share, based on revenue of $98 million to $102 million.

The Eden Prairie, MN-based company, which currently operates 61 stores in 24 states, is on track for major growth in the next two years, company officials said. The firm opened 11 stores in the first quarter, including its first outlets in Las Vegas, Pittsburgh, Syracuse, NY, Oklahoma City and in the New York metropolitan area. Between three and five store openings are planned for the remainder of the fiscal year and an additional 16 to 18 new stores are expected to open in fiscal 2008.

The firm's rapid expansion makes it the fastest growing golf retailer in the country, company officials said. Despite that expected growth, the company downgraded its projections for the fiscal year ending March 3, saying it expects a profit of $6.8 million to $7.3 million, or 59 cents to 63 cents.

Previously, the firm projected profits $7.5 million to $8.1 million, or 65 cents to 70 cents per share. Revenue for 2007 is expected to be $292 million to $300 million, rather than the $300 million and $310 million it previously projected.