Please stand by, as we are about to begin. Good day everyone. And welcome to the Golfsmith International Holdings Incorporated’s Fourth Quarter 2010 Earnings Conference Call. Today’s call is being recorded. For opening remarks and introductions, I would like to turn the call over to Melissa Mackay. Please go ahead ma’am.

Good morning, everyone. Thank you for joining us today to discuss Golfsmith’s fourth quarter and full year 2010 earnings results. As a reminder, our presentation includes and 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, which 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 form on Form 10-K filed with the SEC. We issued a press release this morning. If you have not received a copy, you can find it on our web site, or by calling Investor Relations at 203-682-8200. Presenting on the call today, we have Golfsmith’s Chairman and CEO, Martin Hanaka, as well as Chief Financial Officer and Chief Operating Officer, Sue Gove. With that, I’ll turn the call over to Marty.

Thank you, and good morning all. Thank you for your time and interest in Golfsmith today. Joining me this morning is, Sue Gove as mentioned and remotely Jim Eliasberg, our General Counsel, Jeff Laforce [Ph] and Anna Jobe our VP, Controller. I will begin with a synopsis of Q4 and then a summary of trends both positive and negative. Sue will then provide an in-depth review of our financials and I will close with some forward-looking direction. Q4 began strongly in October. It was our best month of the quarter, it continued with a solid November and solid December. Our ad spend overall was essentially flat year-over-year and we comp every single week of the quarter. Traffic was off slightly over 1%, but our average order value and conversion rose in low single-digits producing a nice net result. Kudos to our entire team as our selling culture continues to improve every quarter. A special mention has to go to our Web team. A cross-section of people from every function at Golfsmith that got behind our growth strategy and produced a 40% increase, that’s right 40. 40% demand increase in the quarter. It is our best performance overall in the top-line since Q1 ‘06, that’s roughly five years. The Direct business overall, including catalogs, was up over 30%. Our dollar market share grew in all categories, those being the eight that are tracked by Golf Datatech, and was our best showing in years. The industry was actually down 0.4% and we were up in the teens for the quarter and we had a net pick up of 8.2% in dollar share gain in 2010. This is encouraging as the Sports and Leisure Research Group has validated at 2010 positive channel shift back towards our channel, off-course specialty excess of January 2011.…

Okay. Thanks, Marty. Good morning everyone. I will first review the financials and then provide some additional detail on the initiatives that Marty laid out, which are aimed at driving sales and earnings growth in 2011. For the fourth quarter of fiscal 2010, net revenue increased 14.2% to $72.9 million, compared to $63.9 million in the fourth quarter of last year. Comparable store sales increased 6.4%, reflecting the enhancements we made to our merchandize assortment, and our continued focus on improving our selling culture. Our conversion rate accelerated throughout the quarter with improvements across all regions. Net revenue reflected a 30.6% increase from our direct-to-consumer channel, demonstrating solid results [Audio Gap] and strategic focus. Gross profit increased 7.8% to $23.4 million, compared to $21.7 million in the fourth quarter of last year. Gross margin for the fourth quarter was 32.1%, compared to 33.9% for the same period last year. The decline in our gross margin was primarily the result of higher shipping and freight cost related to free shipping offers on our website, which was particularly heavy around the holiday season. In addition, there was a reclassification of approximately 100 basis points of vendor funding from gross profit to SG&A. SG&A expense decreased slightly to $27.2 million from $28 million in the same period last year. As a percentage of sales, however, SG&A decreased 650 basis points to 37.3% of net revenue, as compared to 43.8% for the same period during fiscal 2009. The decline was due to reductions in overhead, maintenance, professional service and other administrative charges, again leveraging the top-line growth, which also resulted primarily from ongoing efforts to better align our fixed cost with net revenue and improved profitability. In addition, SG&A benefited from the 100 basis points re-classed from gross margin that I mentioned earlier. Operating…

Great. Thanks, Sue. We are really in good place right now. Barring a macroeconomic setback or some kind of political upheaval we can’t predict, our trend should really continue and you should be aware, we went up 19 out of 20 straight weeks when we came out of a strong October, we said it’s not a trend. When we came out of November, it wasn’t a trend, December, we thought it was a trend and it’s continued 19 out of 20. The one week we had a decrease was weather-related, we were down 0.7. So be aware. Number one we will continue to attack and grow the web. It’s our number one priority. We have new store openings as Sue mentioned, Boca is Golf Mecca. We are opening in St. Louis in a few weeks and then third one we are not announcing yet. And we may squeeze in a fourth, but that would be at tops for this year. Healthier overall store base, all those charges mean we are clean. We have one problem store, we do want to close, it was written-off. So, we can’t imagine any charges in 2011. Product is a net-net positive. I said our Club business was strongest in Q4. That’s continued Titleist has a hot driver and now Woods. Paying the K-series has really continued to sell. Callaway, the RAZR product, which just launched and of course, TaylorMade with R11 and a new SuperFast so, there is a lot of buzz on new product and exciting design. And if we get an early spring, if Punxsutawney Phil was right, then hopefully rounds played will rebound and this market could start to grow again. So, we think we’re in a good place and we are excited to get on with this mission this year and get back to profitability. So, we’d like your questions please.

(Operator Instructions) And we’ll take our first question from Todd Slater with Lazard Capital Markets.

Nice trend, guys.

Thank you.

Good to see. And I guess, maybe if you can just talk a little bit more about 2011, since it is setting up as a nice transition to profitability or just, if you could talk a little bit more about the opportunity to continue these share gains, the ability to drive positive comps this year, how confident do you feel about that? And getting the positive operating margins and how important is rounds played this year to getting it back to profitability?

Sure, we don’t really think rounds played would go up. We haven’t factored that into our thinking. Anything we get would be gravy for us. But the work we have done over the selling culture I think has really taken hold. We positioned ourselves as the play better guys. We are home of the original play better guarantee. We know with our trained people that if we can get our hands on you, we can get you fit into the right club. And we’re so confident that, if you don’t play better, then we’ll give you full credit. That’s really resonated in our Club-Fitting business. It was up 32% last year. We think that will continue this year. We want to do 5,000 more fittings, when we fit you, we get you in the right club and generally you spend more. You will play better, you’ll remember us. You will come back and recommend us. So, there is a whole cycle of service that’s related to this fitting initiative around our selling culture. So, we’re very confident that that will happen. There are fewer people in this space. So, that will anniversary. We are opening good stores in good locations. We had four openings last year, which will anniversary and based on store days will contribute and we are expecting a 20% increase in the Web, round numbers, 10 million bucks. So, that’s alone almost a 3% comp on our base. So, we’re pretty confident that this trend will continue. And that should be the fuel we need to get back to profitability, and become a leader in this space.

Could you just remind us again of the stores that you’ve closed, what were the losses you incurred on those stores that will not obviously be recurring?

And combined…

On an operating basis.

Sure. How accretive is it right?

Yes combined, it was about 600,000 on an annual basis, the losses.

Right, so not huge.

Not huge.

Not bad, but not huge, okay.

Couple of pennies.

Yes.

Yes.

You bet, right.

Every couple pennies helps.

Yes.

I guess, my other question would be, just talking through little bit the shift to categories like apparel and private-label, I assume that’s positive for gross margins, as that evolve. But what effect, is this an add-on purchase or does this what effect might this have? Maybe negatively the average ticket, because I’m assuming these are lower average ticket items than on comp.

Yes, I think that’s a good assumption. The trend started last year. As I said, it was our strongest category all year and not only top-line, but margin dollar contribution. And, I think we’re much better positioned this year. And again, based on proprietary product and the margins there shouldn’t diminish our margin contributions on a per-unit basis. This is long lead time stuff. We basically ran out of goods in the fourth quarter by the way in the apparel category. We ran out, we sold through. It affected us as we started the year too little bit. So, that strategy is really important to us. Constructionally, we are in disadvantage of our mix of apparel, compared to other people in this space. So, we have some catching up to do and real confident with the leadership we have and the forward buying plan we have that it will be accretive to the total, and again, maybe the ARU will go backwards, but what we are experiencing this year is an increase in our AOV, it’s continued and now it’s being fueled by new products. If you look the new R11 product, we’re selling drivers at $399. The Titleist product is checking out at $399. So, we’ve actually had a good club mix. So, if there is an effect of apparel lowering the AOV, I think we are more than compensating for it in the Club business, which – let me remind you, is half of our business. Apparel is approaching 20% now, so it’s taken hold, too.

But it sounds like, so apparel could be, an extra, let’s say, an accretive unit transaction, what has been happening to units per transaction at least in the last few months? A couple – what’s the trend in the units per transaction?

Yes, our IPT as we track in Items Per Ticket are flat.

Okay.

And that’s an improvement over where they were. So, they were decreasing 0.1, 0.2, but they’re running flat and that’s a good thing.

Great, well thanks. Yes.

(inaudible) we may get more units, but we know we’re making more dollars per item on a transaction basis from where we have been historically.

Noted, thank you.

Thank you, Todd.

And we’ll move on to our next question from Casey Alexander with Gilford Securities.

Hi, good morning.

Good morning.

The increase in the Web sales, can you give, maybe some color on what was selling online? Was it equipment? Was it soft goods? Was it clearance items? And was there a kind of a regional component as to where it was coming from?

Well, I will tell you it wasn’t clearance, because we have actually moved a lot of clearance off the Web and pushed goods to retail. Other than that, it has been across the board. And we did make a lot of gains in apparel for example because, we committed to putting more of that assortment online, getting it photographed, making it available through central warehouse, we have added a couple of thousand SKUs to our central warehouse versus vendor drop ships. So, we have done a lot of things that have influenced a lot of categories across the board. We have got new leadership there. Our selection has been enhanced. We added SKUs as I said. We added a collegiate store. We focused on a lefty shop. We focused on a junior shop. We added a senior shop. It’s been a whole array of things that we’ve done on marketing, some technology advancements and then real commitment to improving our service and our speed. So, I guess we worked too hard around this item to give away everything, but it’s been a variety of things and a whole team effort and not just our leadership in the Web business that’s been tremendous. But our people in marketing, our people in the IT department, our people on the phones, it’s been great to see that a real focused effort and a tactical plan can get done and we’re seeing the results of that, right across the board.

Okay, great. Thank you.

Okay.

Well, let me wrap up that. Obviously we gave you too much information on the call. But 2009 was about survival. We got through it and 2010 we got back to stability and continue to take share. Q4 showed a definite change in our trend. Our core operating results are very encouraging. We will continue this momentum into 2011. We will get back to profitability and as we enter this big volume period, hopefully we can take advantage of this structural change that exists in the industry. Thank you for your time and interest. Look forward to our call in ending Q1. Good day.

And that does conclude today’s conference. We do thank you for your participation.