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EDEN PRAIRIE, MN-An unseasonably warm fall helped GolfGalaxy Inc. achieve increases in both net sales andcomp-store sales and post a smaller net loss thanexpected.

The third quarter is Golf Galaxy’s lowest volumeperiod due to the seasonality of the game. During thequarter, the golf specialty retailer saw its net salesincrease 56.7% to $31.8 million, compared with $20.3million for the same period of the prior year.Comparable store sales increased 6.7% for the quarteron top of a 9.9% increase for the third quarter lastyear.

The chain, which operates 49 stores in 23 states,reported a net loss for the third quarter of $1.6million, or 15 cents per diluted share, compared withits guidance for a net loss of $1.8 million to $2.2million. For the same period last year, Golf Galaxyreported net income of $3.4 million, or 43 cents perdiluted share. The earnings included a pre-tax gain of$8.4 million realized on the sale of its equityinvestment in Golf Town Canada Inc. stock. Withoutthat one-time gain, the chain’s net loss would havebeen $1.7 million, or 16 cents per diluted share.

In addition to the unseasonably warm weather, GolfGalaxy COO Greg Maanum attributed the sales increasesto improved merchandising. He said during the chain’searnings conference call that the categories ofpre-owned clubs, women’s golf and services were topperformers, achieving double-digit comp sales.

During the quarter, Golf Galaxy opened four new storesincluding its first stores in the Denver, Omaha andTulsa markets. The company also opened its third storein the Philadelphia market. So far this year, thechain has opened 15 new stores and plans to open oneadditional store during the fourth quarter. Next year,Golf Galaxy plans to open 14 to 16 new stores.

Golf Galaxy expects sales to reach $200 million to$202 million next year, an increase of 50% to 52% more thanfiscal 2005. The chain is projected comp-store salesgrowth of 6% to 8%, and net incomeis expected to be $4.6 million to $4.9 million.

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