Good day everyone and welcome to the Golfsmith International Holdings second 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 Mr. Joe Teklits. Please go ahead, sir.

Thank you. Good morning, everyone. Thanks for joining us today to discuss Golfsmith’s second quarter fiscal 2009 results. As a reminder our presentation includes and our responses 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 a press release this morning. If you did not receive a copy, you can find it on our website or by calling Investor Relations at 203-682-8200. Presenting on our call today we have Golfsmith’s Chairman and CEO Martin Hanaka as well as Chief Operating Officer and Chief Financial Officer, Sue Gove. And with that, I’ll turn the call over to Marty.

Thank you, Joe and good morning everyone. Joining me today in New York City are Sue Gove, our Chief Operating Officer and Chief Financial Officer, Scott Wood, our General Counsel; and from Austin, Janette Ramirez, our Controller. After my opening remarks, Sue will provide a detailed financial review and then we will entertain any questions that you might have. First we are grateful to be gaining share in a difficult market place but certainly not thrilled with our revenue decrease. Same store sales did improve sequentially but we experienced a weaker trend and expected especially post Father’s Day. Our industry needs continued stimulus as is true of the overall consumer market. Next, margins did improve over last year which speaks to our team’s ability to merchandise market, manage our inventory, and bargain with the vendors as well as handle product and ship it better. We also generated cash and thereby improved our balance sheet to allow us flexibility and the potential opportunity to pursue growth when this deep recession ends. That said, we are not seeing a real improvement in consumer spending that we hoped would materialize. We’ll need to see real employment growth and GDP growth before our segment and the consumer really benefit. So, on that note we will continue to manage the business following the path we followed the first half of the year. Tight expense control, tight inventory control with ample open to buy, continued prudent cash and CapEx spending and smart edge creating marketing and in the case you are not aware we have done a few things we really are proud of in April we got a special promotion with TaylorMade where Sergio Garcia had won the purchase with Golfsmith would have been free. We gave away 20,000 free rounds of golf partnering with…

Thanks Martin. Good morning everyone. For the second quarter of fiscal 2009 we reported net revenues of $114.8 million compared with a $130 million for the second quarter of 2008. The 12% decrease in total revenue was primarily due to a 9.5% comparable stores sales decline and a 28% decrease from our direct-to-consumer channel. While same-store sales were trending better through mid-June and Father’s Day, traffic slowed over the final two weeks of the month. While same-store sales for Q2 improved 220 basis points from Q1, we were pleased even more with our gross margin improvement for the quarter. Gross margins for the second quarter was 34.9%, an improvement of 50 basis points over the second quarter of last year, despite a 70 basis point negative impact resulting from the change in the classification of vendor funding earned from cooperative vendor programs that was implemented in the fourth quarter of last year. As you recall, that changes the shift in benefit from gross margin to SG&A. We also want to point out that this was our first quarter of gross margin improvement since the first quarter of fiscal 2008. Contributors to the improved gross margin performance were lower inventory reserves driven by lower end of life overall inventory levels, less promotions in a year ago, savings resulting from the renegotiations of freight contracts and lower distributions and their expenses. As we stated in our last call, we are seeing the benefit from merchandizing initiatives that includes SKU count reduction in selected categories and a greater focus on top selling brand. SG&A expense declined 7.4% to $31.7 million in the second quarter of 2009 compared to $34.2 million in the second quarter of last year, as a result of our ongoing operational improvements and our zero based budgeting model for 2009.…

(Operator Instructions) Your first question comes from Todd Slater - Lazard Capital Markets.

So it seems like the industry rationalization is moving in the right direction anyway. I was wondering Marty, if you could expand on where you think your share gains are coming from? If you think that’s sustainable and the demand side remains weak, how much more supply do you think needs to come out before you can get some same-store productivity improvement?

Sure, Todd. Thank you. Last year in fiscal 2008, there are about 298 closings, nationally obviously we don’t keep repeating all the geographies and there were about a 133 closings. So net-net there were about a 100 rough and tough 65 net closings. This year we think the openings are de minimis there may be 10 or 15 given the environment. We think the closings at the end of the day are going to be equal to last year. So, an industry that used to have 1,670 doors and then shrunk by down to about 1,500, probably 1,300 doors. And I don’t see anyone going into the business for a long time, even the other direct big box guys have curtailed their openings. So, that’s really something that’s very, very attractive for us. We are opening hopefully, four stores next year, and other one this year which will again give us good position in a great big market. So we think if this trend continues the balance of the year it’s a really good spot for Golfsmith. Then as the consumer comes back, and I read in an analyst report today that said 70-75% of golfers have postponed their equipment purchases for each of the last two years. So when you put that pent-up demand together with the reduced stores and square footage, it puts us in a good place.

Okay. Sort of a segway to that, a follow-on, your gross margin performance was obviously very impressive. And I am just wondering if you think that’s sustainable? Then for Sue, if she could just talk about her thoughts about the third quarter and the fourth quarter outlook?

Sure. I do think that gross margin improvement is sustainable and it’s sustainable in the next year too as we keep moving our mix. We haven’t launched our new MacGregor products, you will see some of that in the fourth quarter which is going to be margin rich for us. You also really seem to benefit of some new talent in our merchandising team on the apparel side where we reduced our vendor count for more meaningful to fewer vendors. We are buying and flowing those goods much smarter. We are promoting it much smarter. We actually moved up our clearance a month earlier to become contemporary and I think that would help us sail through but our average order value could lead to a sales increase and better margins because we got to sell more goods faster at a higher price. So all those things combined and tell me that with the team we have in place. And the field team who’s improved our conversion, our traffic was off mid-single digits. Our average order value was off a little more than that, but we made up forward it and converting so. Our whole stores organization is really developing a sales culture that we can really be proud of and converting at a higher rate. Sue, do you want to talk about the balance for the year.

Sure. The balance of the year from an overall revenue standpoint. We continue to see a challenging environment and as we look at the near term the third quarter we haven’t seen a change in the trend from the second quarter don’t expect to see a change in the trend until very late in the third quarter. Late in the third quarter we’re up against some Hurricanes, we’re up against really the change in overall economic environment and so we see some opportunity at that point. also expect to see that same opportunity come in the fourth quarter but near term continue to see the similar trends to what we have been experiencing.

Okay. Sue just, given the cost cuts and everything else you been doing on the expense side. What is your leverage breakpoint now, what kind of trend would you need to get some SG&A leverage.

And, it varies by quarter, but overall we would need here is -- we will still be at a negative level to see leverage. But lower negative level probably in the under 4% I would say in the 2% to 4% negative level to see leverage.

Your next question comes from Hayley Wolff - Rochdale Securities.

Just to clarify the 2% to 4% was negative same-store sales?

That’s where we would see leverage in the SG&A, yes.

Okay. Then can you just talk about the promotion, the promotional direction that you’ve gone in versus some of your competitors and a lot of competitors are saying that they really need to see flat-out discount in it to drive traffic, but it appears that your more creative promotions have been working. Can you just elaborate on how that is up the market?

We just said at the start of the year that it is going to be a smaller market place and the industry is down I guess 15% rough and tough, maybe more depending on the quarter and for us to get as much as we could at the top line. We got to have an edge, we got to have differentiation and we don’t want just drop price and let’s face it, no one was going to drop price on brand new product, doesn’t make any sense. We are about selling new product, we want to stand for innovation and new technology. So for us you are in a track where that’s where you are going to play, you’ve got to play it right and we did. Some of our competitors have gone after year product and we used try to start selling stuff to 149 and 199 when you can make 299 and 399, I think that’s direction we want to follow. So we are not going to discount new product that’s a commitment we have with our vendors. I think they respect that and we’ve got a very skilled sales force, who understand the product and know how to sell it. And I can tell you when they are now in launch for TaylorMade, I mean it was a delight walking into our stores and literally store after store and had our people tell us all the new features of [Inaudible] why was so great and that’s the kind of enthusiasm that exudes and that our customer really enjoys. So, we are going to keep playing at the top of the pyramid. Yeah, we will be competitive and we have to match, but we are not going to leave the market down. We are going to keep standing for new product, first and fast with Golfsmith, with people who know what they are doing. Create a loyal customer for life.

I think you talked about a lot of new product that was coming out in the fall. Can you just talk about the appetite of the consumer, so may be you move up to full price merchandise because there definitely has been looking for deals, looking for the 299 price point?

We know its funny Hayley, starting August 17th, we can actually deliver the product but Tuesday, we started taking pre-orders and we were first to do that. Ping has a real loyal following. When the G10 launch, that came out two years ago, this September, that carried on for well over a year because that customer wants the newest and latest Ping stuff and we want to be there first. So, I think the appetite of their customer is strong. Now, is it as bigger as it was then, don’t know because, a lot of balance sheets have been corrected and there are probably fewer people that want it but we are going to get as much of it as we can. Same thing on Titleist, the AP1 and 2, when that came out, same thing happened, especially on the AP2 product. They couldn’t catch up to it, it was allocated for a while, I think they know that. And when that comes out in November, I think people will be waiting for it. Mizuno has got some forged product. Cobra has forged product and some new drivers. And at the TaylorMade, their new R9 Irons are going to be spectacular. So, it’s great to see them coming out, I think we are in a position to get as much as we can of a smaller market and get us people go away. I think their choices will be less, they are going to go to the outlet that takes care of them best and hopefully that’s us.

Okay, great. Then, can you give an update on how the apparel effort is going? And then last question, Sue, can you just walk through future cost saving opportunities that you’ve identified the timing?

Sure, I’ll do the apparel. Obviously, it’s going well. In terms of top line, we at the house are not satisfied with their top line. But the apparel category is standing tall and we are refixturing our stores now, in fact, the first group of stores will be done in August. Based on cash and based on age of fixtures in existing stores, you will see us change a third of the market this year, a third next year and a third the following. So within two years all of Golfsmith will be refixtured to support this new appeal direction. So again fewer vendors, more meaningful, buying better. The people we are partnering with spot promotion and we really also investing in people in our stores that understand the feel and touch of apparel and how to present it. So I mean one term, we feel very, very good about our direction there. Sue?

Sure. So on the cost reduction and initiative side; we’ve already talked about several million dollars that are based into the numbers at this point in time, whether it was freight renegotiations or the organizational changes that we made, the reductions that we made, the non-essential positioned at the beginning of the fiscal year. And then we began the lease negotiation process in the first quarter. That process still continues, we will experience about $0.5 million in savings from that process this fiscal year. We are still targeting more. As I said, we are continuing, we are back in the negotiation process and don’t expect that to be wrapped up into another 30 to 45 days and we have additional initiatives in our supply chain. We are still reevaluating the distribution channels where we get the most efficiencies from how we ship, whether its drop ship direct or shipping through our distribution. So there is a pretty significant initiative right now examining that which could materialize into two significant savings which I would expect to really be more reflected in fiscal 2010. We got some tax opportunities where we are still in the process of reviewing our property taxes or [loan] taxes all of that we’ve got a third party contingency firm helping us with that. With so many initiatives underway we are right in the middle of reengineering our special order process and are taking out cost and also see some margin opportunity, improvement opportunities there. So a number of initiatives still underway that we’ll have some effect still in the second half of ‘09, but more importantly will become key to driving further improvement in 2010.

(Operator Instructions) Your next question comes from Casey Alexander - Gilford Securities.

Let me ask you I mean you’ve really been tight on inventories, is that all coming out of inventory per square foot on the floor, or is some of that being pulled away because of the decline in direct-to-consumer? Then secondly if you could expand on what strategies that you might be employing to kind of repair the declines in direct-to-consumer because that seems to be a black hole right now.

I talk about that second. Sue will talk about the inventory first, go ahead.

Sure. The inventory reduction that is primarily coming out of the supply chain from our warehouse and managing what level of inventories we need in the warehouse? What levels we need and backup? Yes, to some extent that is tied to the softness in our direct-to-consumer because much of the inventory that’s maintained in the warehouse is just to support that piece of the business.

All right, so you are keeping the inventory per square foot on the floor pretty constant then?

Much more constant and actually made some investments. We picked our spots for season and actually made some incremental investments there. You talked about repairing direct it’s a fair challenge and the long and short of it is we had business that was representing our direct business representing roughly 20% of the total getting basically over half the advertising historically. So, we consciously over the last several seasons tried to shift dollars into the retail customer and get our share where it’s more competitive. So, we haven’t spent more, we rationalized our direct spending. That’s in total, we are going from 12 consumer catalogs last year to nine this year, but we are not too far off a plan and obviously I think we are doing better than most so retail is really benefiting from that shift as its web to a degree. We are excited about our new website that we launched just yesterday, two by the way. So, we are very excited and we think that is the correct direction. Now, having said that one of the real capabilities that we have just added is this marketing science we’ll call it. They just got a peek at our club making segmentation analysis this week and realize that instead of just having nine big books, I think the future is we’re going to have fewer big books, but a lot more communication with our most important segments. For a lot of people, the direct business is pretty fundamental, but for us, we did not have this level of detail and understanding. So I do think the repair is underway, you won’t really see much change in the fall because again we are out of the big seasons and we’re not walking away from November, December efforts. But as we go to the next year, I think you’ll see Golfsmith be able to repair that and I’ve spent more money because we’re going to do it a lot more smarter again be in more contact with those important segments much more frequently.

And direct-to-consumer is down to what percentage of sales versus years before?

Well, it’s roughly about 20% of our totals.

That still is, okay.

And that includes Consumer Catalog, Clubmaking Catalog and our Web Business.

It appears there are no further questions at this time. I would like to turn conference back over to Mr. Martin Hanaka for any additional…

Thank you very much everyone. We are in New York City so if there are follow-up questions from any investors or analyst; we are 212-710-6465. Thank you very much for your attendance today. Good day.

This concludes today’s conference call. We thank you for your participation.