In tandem with a group of liquidators, Dick’s Sporting Goods has won an auction bid to acquire Golfsmith’s U.S. business for approximately $70 million, according to a Reuters report. The results of the auction are not yet public, and the deal still requires approval from a U.S. bankruptcy court judge.
Upon acquiring Golfsmith, Dick’s plans on keeping 30 of the brand’s stores open and shuttering the rest, according to a source familiar with the matter. Although it is unclear which stores will remain open, Dick’s also plans to retain 500 Golfsmith employees as well as the brand’s intellectual property and inventory.
The move would leave Dick’s with the largest collection of golf retail stores in the U.S. The brand currently operates 72 Golf Galaxy stores; adding the 30 Golfsmith stores would give it 102, compared to the 85 stores at competing retailer Worldwide Golf Shops. Worldwide Golf Shops reportedly placed a bid of its own in the Golfsmith auction, but did not win.
Golfsmith operated 109 U.S. stores and 55 Golf Town stores in Canada at the time of its bankruptcy filing in September, but has since closed various U.S. stores and sold the Canadian shops to an investment group.
The Golfsmith bankruptcy and the brand’s ensuing auction and store closings are yet another example of how consolidation continues to dominate the sporting goods industry. While Dick’s has reigned supreme as competing brands such as Sports Authority and Sport Chalet have shut down their operations, these events have shown just how difficult it is becoming to specialize in a niche sport or hobby on a national basis.
While specialty retailing certainly has its benefits from a differentiation standpoint — whether in sporting goods, apparel, home goods or entertainment — scalability is always a concern, simply because there may be a finite number of potential customers. With do-it-all brands Amazon and Walmart already serving as a go-to for many items sold in these specialty locations, the focus on product-related experiences and exceptional customer service must become more of a priority.