Golf Galaxy Inc. apparently succeeded in convincing the financial world that it should not be viewed strictly as a golf company.
That seeming paradox was illustrated July 29 when the initial public offering of Golf Galaxy, an Eden Prairie, Minn., retailer, opened for trading on the Nasdaq Stock Market. Golf Galaxy’s shares, initially priced in the range of $11 to $13, opened for trading at $14 and leaped as high as $19.27 before finishing at $18.61, up 32.9 percent.
The planned offering of 3.3 million shares was increased to 3.95 million because of demand from investors, who didn’t appear discouraged by recent reports documenting downward trends in rounds played and participation.
Golf Galaxy managed to persuade Wall Street, at least for the moment, that it deserves to be considered among the hot class of specialty retail stocks. Specifically, management has sought for the company to be viewed as a smaller version of Guitar Center, a well-regarded music retailer.
Casey Alexander, special situations analyst at Gilford Securities, said Golf Galaxy’s offering also was timely, coming on the heels of Callaway Golf Co. reporting improved second-quarter results and Acushnet Co., Titleist’s parent, raising income projections for the rest of the year.
Golf Galaxy, which operates 45 stores in 19 states and a Web site, had sales of $133.1 million and net income of $3.8 million for its most recent fiscal year, which ended Feb. 26.
The IPO raised approximately $73.5 million, and $19.6 million of that will be used to pay the private-equity firms that have backed the company since it opened in April 1997. The remaining proceeds will be used for general corporate purposes and Golf Galaxy’s continued store rollout.