Golfsmith: “Forces outside the game and inside the game and just inside their own organization worked against them.”

Excellent reporting on multiple fronts from Mike Stachura here at GolfDigest.com on the Golfsmith issue, and besides covering all elements to the bankruptcy filing, Stachura shows why I found the reporting in respected business publications so lacking.

Make sure to read to the end with the part about PGA Tour Superstores and their bullishness.

And there was this:

To the first point, it’s clear from a read of the Golfsmith bankruptcy filing and those familiar with the company both internally and externally that Golfsmith expanded to its current 109 stores in the U.S. too aggressively, in the wrong way (as far as store formats go) and most likely without proper capital to support such expansion.

Said a source close to the situation speaking on background, “Golfsmith has markets where there are simply far too many stores where the coverage is too great, and in other markets there might be the right number of stores but perhaps the size of the stores was larger than they needed to be. That over-investment in bricks and mortar costs quite a bit of capital.

“Golfsmith has a cost structure with its store base that is far too great and also a debt load as a result of some of those investments that is too high.”

How high? The bankruptcy filing indicates nearly $200 million in outstanding loans or credit facilities. In addition, Golfsmith’s list of its 30 largest individual creditors, including major equipment companies, totals more than $33 million. For example, Callaway is owed nearly $5.5 million, TaylorMade $5.1 million, Nike $3.5 million, Acushnet (parent of Titleist and FootJoy) $3.9 million and Ping $2.3 million.