Web Street Golf Daily Pulse
ANY IDEA WHO SAID THIS? “To be honest with you, you sort of wonder if it's going to happen again. I've been close, more than a handful of times and never closed the door. You sort of sometimes wonder if you're ever going to win again. I'm not getting any younger, I'm about to turn 38, and it's special to have the family out here.”
BRAIN TEASER: How much does the winner of the Race to Dubai receive from the bonus pool?
PARTNERS! Relationships are tricky. It takes work from both sides to give it a fighting chance. Sometimes it is doomed to fail. Communication is the central theme towards finding a way to cohabitant peacefully. Business relations can be even more problematic. It’s about making money, which should be a common goal from both sides. Yet, the element of communication isn’t often as clear or necessarily a two-way street. That seems to be where one retailer and prominent equipment manufacturer now find themselves.
Games People Play, Inc. (GPP) out of Beaumont, Texas is suing Nike over the sale of goods to different purchasers at different prices and discriminatory promotional practices. GPP has filed this action under federal and state antitrust laws, specifically Section 2(a) of the Robinson-Patman Act and Oregon’s Anti-Price Discrimination Act.
The retailer, who has been listed multiple times in the past as one of the Top 100 Golf Shops in America by Golf World Magazine, lists various examples where Nike Golf provided products at lower prices to other retail accounts. Despite bringing the matter to the attention of Nike Golf, it failed to do anything about it, according to the lawsuit. In turn GPP went forward and purchased product from a gray market account even though Nike Golf was made fully aware of it.
According to papers filed, Nike Golf sent representatives, including Mike Francis, Nike Golf’s GM, to meet with the owners of GPP to discuss and or potentially resolve the matter. However it had the opposite effect as it eventually led to a contentious relationship, which has seen GPP’s business impacted by its strained relationship with Nike Golf. GPP contends that Nike has refused to stop its ongoing price discrimination consistent with the terms of Oregon’s Anti-Price Discrimination Law, and therefore it continues to suffer ongoing price discrimination and lost profits.
GPP is suing for damages caused by unlawful and unethical golf suppliers that affect supplier competition, suppler retail accounts, consumers and shareholders. The complaint was filed in May but in October Nike’s request for a motion to dismiss was denied. It is expected to go to trial by jury.
UPON CLOSER INSPECTION: Dicks Sporting Goods has reported throughout the year that its golf business has been troubling, to put it nicely. In the first quarter, it said Golf Galaxy was down 10.4% and Dick's Sporting Goods golf business was off by high-single digits. In the second quarter, its largest quarter for golf sales, Golf Galaxy was down 9.3%, while Dick’s golf business was “somewhat less.” As reported in the Nov 19th issue of the Daily Pulse, third quarter sales at Golf Galaxy’s decreased by 8.9 percent, while Dick's golf business was down a similar amount.
Back on May 20th, when Dick’s reported its first quarter operating results, Ed Stack, Dick’s chairman and CEO stated, “There is glut of inventory in the market at both wholesale and retail as a result of the lackluster sales over the past 15 months. The core golfer doesn't seem to understand or has not yet fully embraced the new technology our vendors have brought to market.” Stack also acknowledged at the time he wasn’t sure where the bottom was in golf equipment sales.
On August 19th, when Dick’s updated the investment community on its second quarter results, Stack said, “Golf continues to be our most challenging business.” The company had also reduced its footprint in golf by 1,000 square feet per store location. It was widely reported that it had also parted ways with PGA certified professionals as part of its downsizing in the category. Also the retailer identified the cost of reducing its golf component. “In the second quarter, we recorded a $20.4 million of pre-tax charges related to the restructuring of our golf business. The charges include a $14.3 million non-cash impairment of golf trademark in store assets, severance charges of $3.7 million related to the elimination of specific golf position from our DICK stores and the combination of Dicks golf and Golf Galaxy corporate and administrative functions, and a $2.4 million write-down of golf related inventory,” stated André Hawaux - EVP and CFO for the company.
During the third quarter conference call to Wall Street analysts, Stack was questioned about the status of golf markdowns. He replied, “Our inventory is in great shape. I think the inventory at the vendors is in better shape than it has been. Those markdowns around golf are behind us.”
It begs the question how can its inventory glut as of May 20th be in such great shape by November 18th when its sales were consistently lower in each quarter and it exercised a $2.4 million write off on the balance sheet? Meanwhile, Stack is still uncertain if golf has hit a bottom. On the third quarter call he said, “I don't want to give guidance to what we think the golf business is going to be, but as I said I think it's going to hit bottom, may have already hit bottom but some of the new product launches have done quite well.”
TIME FOR SOME NEW PRODUCT: PUMA Golf has introduced BioDrive. “The BioDrive was literally designed from the ground up. Starting with the outsole we focused on three zones – the heel, the midfoot and the forefoot – keeping in mind all the elements important to a golfer – comfort, fit, flexibility and balance,” said Grant Knudson, head of footwear, PUMA Golf. “This spikeless, versatile shoe allows golfers to go straight from work to the gym, to the range, or to play 18.”
It promises superior grip and control on course by utilizing multiple decoupled octagon shaped pods in the forefoot for flexibility and increased ground contact and traction. Additionally, the mid-foot axis point allows for supportive torsional movement for a balanced feel. It also is built with four connected pods in the heel provide a sturdy platform for stability. Built on an all-new anatomical last, the carbon rubber in the shoe’s outsole ensures an excellent grip and long-lasting durability, according to the company, while a TPU perimeter wrap is bonded 360 degrees around the shoe for improved protection and durability.
“Training in the gym and on the course is important for golfers of all levels. And when you need to go from the weight room to the range it’s vital to have the right footwear. I love the versatility and performance of the BioDrive shoes,” said Joey D Diovisalvi, a golf fitness expert and COBRA PUMA GOLF ambassador. “It’s a great performer on the course that allows the golfer to grip the ground through their swing but can also be worn to the gym. From a biomechanics standpoint, it provides the flexibility, stability and balance necessary for optimal performance.”
The BioDrive ($140) is available in four color combinations and is scheduled to hit golf retailers starting on December 15.
KIDS PLAY: Melbourne teenager Ryan Ruffels couldn’t resist a subtle sledge to Masters champion Adam Scott after crushing a drive at the par-five sixth at Metropolitan. “That (drive) was as much as I’ve got and we got up there and I was quite a bit past him. Then he eagled the hole and he’s like, ‘Just look at the scorecard, mate’. That shut me up,’’ Ruffels said. READ MORE>>>
EYE ON A BIGGER PRIZE: Amateur Todd Sinnott has taken the clubhouse lead midway through the second round of the Australian Masters in Melbourne. Sinnott, a member at host course The Metropolitan, was in a share of the lead after the opening round but while the likes of Steve Bowditch faltered, Sinnott (71) fired four birdies and three bogeys as he finished the second round at six under. “I am obviously not here to make the cut,” Sinnott said. READ MORE>>>
STAYING DOMESTIC: The PGA of America appears to have abandoned its plan of moving the final major of the season away from the United States. On hearing of the PGA of America’s new stance, Gary Player took to Twitter to voice his disapproval. Player said: “What a shame. What a lack of vision. Golf has never been more global. Could have been a game changer for the PGA. Pity.” READ MORE>>>
ANSWERS: “To be honest with you, you sort of wonder if it's going to happen again. I've been close, more than a handful of times and never closed the door. You sort of sometimes wonder if you're ever going to win again. I'm not getting any younger, I'm about to turn 38, and it's special to have the family out here.”--Charley Hoffman after his win at the OHL Classic at Mayakoba.
This week’s DP World Tour Championship, Dubai is the climax of the European Tour Race to Dubai. The tournament also determines the Race to Dubai Bonus Pool, which goes to the top golfers on the Race to Dubai after the tournament. It was original set at $10,000,000 but reduced to $7,500,000 paid to the top 15 players with the Race to Dubai winner getting $1.5 million. In 2012 the bonus pool was cut in half to $3.75 million and reduced to the top 10 golfers, with the winner getting $1.0 million. Conversely, the FedExCup winner receives $10 million. The fifth place finisher received $1 million in the FedExCup bonus pool.
THE INFORMATION CONTAINED IS BELIEVED TO BE RELIABLE, BUT IT IS NOT GUARANTEED. THE OPINION EXPRESSED IS THAT OF TERRY MCANDREW AND SHOULD NOT BE CONSIDERED A SOLICITATION TO BUY OR SELL SECURITIES IN ANY OF THE COMPANIES DISCUSSED WITHIN THIS NEWSLETTER. CONTENTS OF THIS NEWSLETTER MAY NOT BE REPRINTED OR REBROADCAST WITHOUT THE EXPRESSED WRITTEN CONSENT OF TMAC GOLF