Good day everyone and welcome to the Golfsmith International Holdings LLC first quarter 2009 earnings conference call. Today’s call is being recorded. For opening remarks and introductions, I would like to turn the call over to Jean Fontana of ICR. Please go ahead Ms. Fontana.

Thank you. Good morning everyone. Thank you for joining us today to discuss Golfsmith’s first quarter fiscal 2009 results. Before we begin the call, I would like to review our Safe Harbor statement. Our presentation includes and our response to various questions may include forward-looking statements about the company's financial results and about future plans and objectives. Any such statements are subject to risks and uncertainties and could cause the actual results and implementation of the company's plans and operations to vary materially. These risks are discussed in the company's annual report on Form 10-K for fiscal 2008 filed with the SEC. We issued our press release this morning. If you did not receive a copy, you can find one on our Web site or by calling Investor Relations at 203-632-8200. Presenting on our call today we have Golfsmith's Chairman and CEO, Martin Hanaka, and Chief Operating Officer and Chief Financial Officer, Sue Gove. And with that, I’ll turn the call over to Marty.

Thank you. Good morning all. We appreciate your interest and time today. With Sue and myself today, and we have also Scott Wood, our General Counsel; and Janette Ramirez, our Controller. After my opening remarks, Sue will provide a detailed financial review and then discuss the important progress we’ve made and operating improvements at Golfsmith. Naturally, Q&A will follow. While the current recession, some say the Great Recession, continue to pressure all retail, consumer, discretionary categories, golf certainly is no exception. We did experience top line pressure, although we fared better than planned. We have seen some stabilization and are also encouraged by the OEM efforts to stimulate golf and drive traffic. Additionally, we’ve been able to cut costs, reduce inventory levels, and manage cash quite effectively. We are very proud of our Q1 balance sheet. In fact, our liquidity position reflects $16.4 million of available borrowings at the end of Q1 as compared to just $2 million last year. Great job by all at the company. While comp sales dropped 11.7%, this was due to a slight decrease in transactions, but a larger drop in AOV or average order value. The consumer is spending less, particularly on Iron Set and other big ticket categories. Our conversion has actually improved nicely which is very rewarding giving our Guest-First commitment and investments. In fact, at store manager, bonus criteria this year is based on Guest-First, first time ever at Golfsmith. Our net loss totaled $5.1 million, or $0.32 per share and this compares to $5.4 million or $0.34 per share in 2008. In terms of top line, February and March were better than January, which continued our Q4 trend. Our toughest markets were aligned directly with the national economic pattern. Our average order value patterns were consistent across all three channels.…

Thanks, Marty. Good morning everyone. As Marty mentioned, the first quarter of fiscal 2009, we reported net revenues of $68.8 million compared with $79.2 million for the first quarter of 2008. The 13.2% decrease in total revenues was due to a 24.8% decline in net revenues from our direct to consumer channel and a decrease of 11.7% in comparable store sales. Sales continue to be pressured by the recession; however, consumers are responding to the increase in value based promotions, the leading manufacturers introduced during the first quarter of this year. Gross margin for the first quarter was 33.1% as compared to 34.3% for the same period last year or a decrease of 120 basis points. Gross margin declined 40 basis points due to price reductions designed to drive sales of certain items and higher seasonal markdown, 20 basis points due to the price repositioning of used clubs and 80 basis points resulting from a change in estimate related to the classification of vendor income earned from cooperative vendor programs that was implemented in the fourth quarter of last year. These reductions were partially offset by an increase of 20 basis points in gross margin due to the renegotiation of freight contract and lower distribution center expenses. SG&A expense declined 14% to $27.8 million in the first quarter of 2009 compared to $32.3 million in the same quarter of last year. As a percentage of sales, SG&A declined 40 basis points in the current year quarter to 40.4% of net revenue compared to 40.8% of net revenues in the first quarter of 2008. The decrease in SG&A was due to a 50 basis point reduction in advertising as a result of a change in our marketing strategy and 100 basis point decrease due to the change in estimate related to…

(Operator instructions) We will take our first question from Derek Leckow with Barrington Research.

Thank you. Good morning

Good morning.

I just had a question on direct business being down 24.8%. I understand you guys did reduce circulation. Is the percentage decrease in costs in the direct business about the same?

No, our cost savings is greater than that, and the reinvestment in retail paid off and into the Web, search engine, key word purchases and so forth. So if you look at our business, Derek, 79% of it has basically been retail. Retail has been getting just a little over 50% of the spent. We feel our share of voice in many markets, and in certain times of the year it’s been inadequate. And when we spend more we look really hard at clubmaking and catalog and the returns there and it’s a better decision for us to reinvest. So we would expect to continue this throughout the year. We are managing it closely. But our inspection of our first quarter results says this is the right path to follow.

What I was trying to get at was when you’ve reduced the catalog spend, there is probably a corresponding impact on store comps because you are shipping catalogs to people presumably who are also near a store. And so I am trying to gauge, is this the new level of sales within the direct channel? Is this kind of what you are thinking it will remain or –?

No. We don’t think it will necessarily remain at this level because we still are mailing into the catalog markets, which are not a complete overlap with our retail trade areas. So it’s not a 100% overlap. There are many markets where done [ph] catalog where there are no retail stores. We are going to keep communicating with those guests all throughout the year. And the retail guests who may have got the catalog are definitely going to be getting some type of mail or communication from us. In fact, over the course of the year, we expect that we will increase our retail circulation, let’s put it that way, by 50%.

So that circulation goes up quite a bit –

It goes up quite a bit.

I noticed you are not shipping out those – many of those huge catalogs. I mean at least around the office here kind of pulling my people I work with, they didn’t get their huge Golfsmith catalog. I think that’s probably part of the reason we see the cost decline, right? Shipping as many of those big books out.

Yes, what you mentioned was a 220 page book mailed, it’s actually in Q2. And this year it was an 84 page book.

Okay, very good. Then if I could just switch over to the balance sheet here for a second. You said you had – you’ve renegotiated some vendor payment terms. And I wondered if you could elaborate on that as it relates to your payables, which had risen, but I wonder if some of that might be timing here because you have such a huge quarter coming up, and is that a timing function or is that more of the renegotiation of the vendor terms?

Well, basically we have spoken with each of our vendors as we do every year, and last year made it a priority to look for extended dating where it made sense. We have gotten meaningful changes in a lot of vendors that are annual. We also have a couple of window that are seasonal where we also have additional dating. And then finally, we’ve had a number of power buyers. We’ve had power buyers with six months dating where vendors are trying to move inventory. We’ve been selective on that but that gives us a chance to sell it before we have to pay the bill. And that’s what you are seeing in that number. I just want to reiterate it again, we are the promptest payer in the business, we have been and we will continue to be. So that’s a real number based on a lot of hard work by a lot people in securing these terms.

Is that something you think will repeat again next year in going forward or is it something that’s sort of a one-time in nature because –

This is a path we are on. It will repeat. We expect to enhance it as we get into next year’s negotiations, which will take place in September, October, November.

All right, great. Well, thanks a lot and good luck with your peak season here.

Thank you very much.

Moving to our next question from Hayley Wolff with Rochdale Securities.

Hello.

Good morning.

Can you give a little color on what you are seeing in the month of April and May, since we are getting into the prime golf season.

Yes, we see that the pattern from first quarter is slightly improving. Again, some of the times we’re still negative of course in our comps. But we feel good. We feel we are in a good place right now. A part of it is you know I think the golf industry has recognized that we are competing in discretionary space. So it is not just about playing golf, it’s about taking business from other industries. And what you are seeing is our vendors become very aggressive. In fact today, as of this morning, we had 32 different vendor promotions out there. For getting our 20,000 free license, if you had a free 6-Iron you can get free sport shoes. There are five different free Fairway Wood offers of one shade [ph] perform or another. You get to golf with a Pro. The sport devil [ph] offers. There’s three buy-two-get-one free offers. By the way these are margin neutral for us. There’s 50% trade-in bonus and there are two, four, six, eight, it’s like a dozen free items with a purchase out there. So, I think what’s happening is everybody is trying to go after the business, take share and that’s driving traffic. If you have been today (inaudible) pulling the margin line and I think it’s going to lead for us. We are on plan, basically – and the bottom line is we are on plan.

How are these promos affect your average ticket or your same store sales in the second quarter?

Again, we are on plan. So in the aggregate we feel okay. When I readily [ph] selling these items as add-ons, absolutely, I like that to get that extra sale. And in normal times I think the promos go away in normal times. We get to add to the ticket and double the average order value. But now we are fighting for every dollar we can get we are supporting all these promotions as best we can.

But it sounds like the comp turns are maybe better than you thought coming into the beginning of the year?

Again, slightly better, but we are on plan. And as you know, June is the big month for us. Every week it’s bigger, and June we have the biggest week of the year and the third biggest week of the year. So, it’s all about bad day and biggest peak.

In first quarter, we did exceed our plans somewhat or slightly better than planned.

All right. It seemed like it. Can you talk about – given all the discounting that’s gone on, what kind of conditioning are we going to see with the consumer in terms of their appetite to buy $500 drivers next year. I know the R9s premium price is selling well. But just in general do you think it’s going to become greatly difficult to get a guide of buying (inaudible) driver?

I think it all depends on what happens with the economy. Our driver business by the way is very good. And the problem is that in the Iron Sets with regard to big ticket and our average order value there is off about 10%. So selling same kind of units you get a 10% decrease. But I’d expect that golf will ultimately rebound when the economy rebounds. And once you see some GDP growth I think you are going to see two or three months later that the consumption will increase and then I think the vendors will lean off of these promotions. And we can get back to a normal environment. And that happens, I think there is going to be a lot furbish [ph] in the game. I think the structural change is some that can only continue because there were 298 closings last year. It netted 197 because there were some openings. I don’t think there are lot of openings this year. So, this is natural effect, this recession is putting a lot of people out of business. We are getting calls every other day for regional business, it’s for sale, looking for cash, closing a couple doors. So I think those who get through this are going to get an opportunity to prosper.

Do you have corresponding square footage data to the number of doors that closed?

I don’t. This is not NGF, and frankly what they do is they have the complete database and they contact each and every golf course at retail every single year. So, it’s done one at a time. I don’t know if they’ve ever aggregated the square footage.

Okay, thanks a lot.

Thank you.

At this time, it does conclude the question and answer session today. I would like to turn the conference back over you for any additional closing remarks.

No, we have no further comments. Thank you again for you time, interest, and attention today. We look forward to continue our plan in the second quarter. Thank you.

That does conclude today’s conference. Thank you for joining and have a good day.