Lifestyle. Innovation. Experience.

January, 2010
 Safe Harbor

Our presentation includes, and our response to various questions may include,
forward-looking statements about the Company‟s revenues and earnings and
about our future plans and objectives. Any such statements are subject to
risks and uncertainties that could cause the actual results and the
implementation of the Company‟s plans and operations to vary materially.
These risks are discussed in the Company‟s fillings with the S.E.C., including,
without limitation, the FORM 10K filed March 3, 2009.

Golfsmith International Holdings, Inc.

Safe Harbor Statement
Under the Private Securities Litigation Reform Act of 1995

Lifestyle. Innovation. Customer Experience. 2

 Investment Highlights

• Strong Brand Recognition

– Leading retailer known for innovation and unique shopping experience in the golf
and tennis specialty store market
• Operating Margin Expansion Opportunity
– Improving operating efficiency
– Increasing store productivity
– Cash flow Improvements
• Sales Growth Opportunities
– Expand store base in key markets
– Leverage internet, catalog and retail to drive sales
– Gain market share in consolidating industry
• Favorable Demographic Trends
• Experienced Management Team

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 Brand Position

• One of the largest multi-channel retailers of golf equipment, apparel,

club making, and services

• Recognized retail brand with 42-year heritage of innovation &

service

• Proven store model with activity-based shopping environment

• Differentiated mix of national brands such as Callaway,
TaylorMade, Ping, Titleist, Cobra and Mizuno and
integrated proprietary brands such as Lynx and
Snake Eyes and now MacGregor!

• Tennis specialty leader

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 Gaining Market Share
 Big Box market share likely to increase near-term while other off-course
retailers experiencing market share loss
 Total rounds played has been relatively flat for the last 5 years
2007-$4.8B Industry 2008-$4.5B Industry 2009-$3.9B Industry
5.39% 5.55%
5.88%

94.61% 94.45%
94.12%

Total Industry
Golfsmith

07 to 08 08 to 09 Comparison is based on adding together five categories:

Golfsmith Share clubs, balls, bags, gloves, and shoes.
Growth 2.91% 6.01% Source: NGF *

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 Industry Consolidation
 Since 2007 the number of total off-course doors decreased by 21.6%

Off-Course Doors
1700 1574 1479
1400 1234
-21.6%
1100
800
2007 2008 2009
2009 Retail Composition

120%

100%
20%
80% Boutique/Sma
57% 16%
60%
Medium/Large
40%
19% 63%
20% Big Box
24%
0%
1,234 Doors 8.6MM Sq Ft

Source: Longitudes – 2009 Off Course Retail Golf Market

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Golfsmith | 3-Year Brand Vision
 3-Year Brand Vision

Golfsmith will be known as the

brand that inspires people to play
better and enjoy life more

• We will be known for “new” and “value”, with an emphasis on

always having the latest new products
• We will showcase our people – and they will be the best
experts in the industry
• We will deliver a “personalized” experience for every customer
• We will lead the way online in driving a global brand experience
that drives sales in all of our channels

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 New Product Launches

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 Innovative Product & Promotions

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 Unique Events

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 Marketing Support

• Get closer to our customers – research and CRM

• Optimize Retail support
• Tiered approach – Xtreme stores, Core stores
• Climatic marketing continues
• Expand grassroots
• Comp unique events –Sergio/Phil, free rounds/lessons, etc
• Lead the industry in new product launches
• Lead the industry in social marketing efforts
• Refine our Direct business – and science of all spending

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Golfsmith | 5 Drivers of Strategic Plan
 5 Key Drivers to Success

• Expand Store Base

- 4 new stores in 2010
- 7 new stores in 2011
- 7 new stores in 2012

• Refine Direct Business

- Grow web business aggressively
- Apply marketing science to refine catalog circulation by customer segment

• Increase Gross Margins

- Focus on Proprietary brands
- Shift to Margin-rich category mix

• Improve Current Retail Productivity

- Make selling culture real
- Exit poor performing stores with no potential

• Operational Excellence
- Improve processes
- Create high performance culture

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Golfsmith | New Store Growth
 New Store Growth
Steps to Value Creation

• Established a New Real Estate Methodology & Standards

• Optimize Existing Store Portfolio – 3 Yr View

• Backfill and defend existing Key Markets/Locations

– Strategically prioritize portfolio moves

• Identify & Enter New Markets/Locations

– Seek Highest ROI/Market Share Opportunities – More Top
Performers
– Enter competitively „open‟ markets/locations

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 Capital Investments
• Store Remodels
– Norwalk, CT
– Manhattan, NY
– Austin Showroom
– San Jose, CA
– Woodland Hills, CA
– Chicago Schaumburg, IL
– Chicago Downers Grove, IL
before

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 • +/- 18,000 sq. ft.
• Full Product Assortment
• Full Size Hitting Bays (Pie) & Full
Putting Green
• Center Apparel Focus
• Pre-Owned Club Center
• Club Solutions Center with Clubmaking
Staff
• GolfTEC Inside

BMW 3 Series

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 • A Golfsmith Store Plus Full Service Golf
and Tennis
• Approx. 25,000 sq. ft.
• Enhanced Experiential Areas
• Expanded Hitting Bays (6-8)
• Expanded Putting Green
• GolfTEC Inside
• Tennis

BMW 5 Series

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 • The future of big box golf and tennis
retail
• 30,000 – 40,000 sq. ft.
• A fun and inspiring environment
• A showcase for Innovation, Lifestyle and
unrivaled Experience

BMW 7 Series

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 New Store Growth

Target New Store Economics

7 Series 5 Series 3 Series

Sales PSF $193 $220 $238
Contribution
Gross Square Footage 35,000 25,000 20,000
Sales - Year 2 $6,750 $5,500 $4,750
4 Wall Contribution - Year 2 13.2% 12.2% 12.5%

Gross Build-Out Costs $1,610 $1,150 $920

Investment
Pre-opening Costs $130 $130 $130
Initial Inventory $1,500 $1,250 $1,000
Total Investment $3,240 $2,530 $2,050

Returns IRR 5 Years 16.5% 17.0% 17.2%

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Golfsmith | Refine Direct Business
 Refine Direct Business

Web – How do we stack up?

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 Refine Direct Business

Web – 2010 Key Projects & Investments

Growth will come from the following:

1. Site enhancements – content and functionality
• Third party partnerships
• Mobile and social expansion
• Name Collection
• Outlet Strategy
2. Organizational Investments

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 Refine Direct Business

Site Enhancements

• Scale Video Content

(Exclusive & Vendor
Provided)

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 Refine Direct Business

Email Expansion

• Retail name collection

• Email append and data
capture
• Hire dedicated email
manager
• Better segmentation =
more targeted emails
• Increased focus on
softlines and Retail

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Golfsmith | Increase Gross Margins
Increase Gross Margins
Margin Building Strategies
• Increase Proprietary Penetration
– Assortment Strategy: Where product is not brand-sensitive
– Value Added: Benefit through product performance or financial savings
– Marketing/Visual Display: Place product in all channels consistent with OEM brands
appropriate to product offering and pricing strata
– Metrics/Accountability: Identify performance/Create accountability

• Increase High Margin Category Penetrations

• Increase Apparel/Softlines Penetration

• Increase Penetration in:

– Consumables
– Footwear
– Furnishings
• Leverage higher margin Club Vendors

• New IT Systems

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Golfsmith | Improve Retail
 Improve Retail Contribution
Sales Culture Shift
• Rationalize Payroll Spend
• Hiring Practices/Profiling
– Re-establish a profile for each position
– Implement pre-employment surveys
• Proprietary Penetration
– Add proprietary penetration as a key metric to drive margin
• Commission/Spiff Program
– Re-engineer components to promote enhanced selling culture
• GM Conference
– Launch new store org structure and S.E.L.L
• MacGregor Launch
– Launch brand roll-out in February

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Golfsmith | Operational Excellence
 Operational Excellence
• Disciplined process for all major contract to be competitively bid
and saving measured - sales base too low
– in some instances 3rd party facilitators and/or contingency firms utilized
• Exit unprofitable stores where there is no view toward profitability
– sales base too low
– cannot adjust expense structure far enough
• Implement labor management tools to improve store level staffing
to traffic and drive out unproductive cost
• Implement Golfsmith Loyalty Index (GLI) and use detractor
information to drive process improvements
• Establishing vendor collaboration process to improve efficiencies
in supply chain
– better compliance
– chargebacks for discrepancies

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 Operational Excellence
• Supply chain refinements
– optimize method of shipment (DC vs. dropship)
• Drive the selling culture
– take tasks off the selling floor
– scanners phase II and beyond
– POS improvements
– receiving improvements
• System implementation to enable new/better decision making
– Oracle – foundation of decision support
– warehouse labor and slotting
– merchandise systems
– CRM/Loyalty program support
• Drive business unit profitability with improved information and
tools
– Retail
– Web
– Call center
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 Institute Operational Efficiencies
Cost Savings In 2009 In 2010 Net
Savings
Distribution Efficiencies 1,106 250 1,356

Zero based budget 400 400

Elimination of non-essential 902 902

positions
Energy Management 158 158

Professional Services 120 120

Reduced telecom cost 147 60 207

Reduced insurance cost 261 261

Lease negotiations 464 249 713

(1) Multi state tax liability 308 88 396

Special order process - 540 540

improvements
Armored car contract 102 102

Scanner Project - 275 275

Advertising 59 59

Cash management 250 250

Misc. Professional Services 117 117

TOTAL 4,394 1,462 5,856

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 Summary of 3 Year EBITDA Drivers

2009 EBITDA Estimate $ 8,000

2012 EBITDA Target $33,000
Change $25,000

Drivers:
Comp Sales Growth 5,300
Direct Growth 2,000
Margin improvement 8,000
Cost Savings 2,500
New Stores- 2010 3000
- 2011 5000
- 2012 2200
10,200
Inflation/Cost Increases <3,000>

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Golfsmith | Financial Highlights
 State of the Business

• Sales trend stabilized – up 0.9% in Q4

• Improved inventory turns and reduced average inventory per store 7%
• Generated free Operating cash flow of $20 million for the year
• Reduced debt by $16 million

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 Growth Highlights

# of stores

72 72 74
62
46 52
38

2003 2004 2005 2006 2007 2008 2009

Total Revenues

$388.2 $378.8
$357.9 $338.0
$296.2 $323.8
$257.7

2003 2004 2005 2006 2007 2008 2009

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 2009 Estimated Results

Key Factors (000's)

YTD '09 YTD '08 Chg.'09/'08 % Chg.

Net Revenues 338,025 378,772 (40,747) -10.8%

Gross Margin % 34.2% 33.7% 0.5% 1.5%

EBT (3,285) (394) (2,891) 733.8%

Inventory 77,753 90,499 (12,746) -14.1%

Debt/Borrowings 36,000 51,708 (15,708) -30.4%

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Golfsmith | Summary
 Why Golfsmith?
• One of the largest multi-channel retailers of golf equipment, apparel,
club making, and services
• Recognized retail brand with 42-year history
• Proven store model with activity-based shopping environment
• Differentiated mix of national brands and integrated proprietary
brands such as Lynx, Snake Eyes and MacGregor
• Established direct channel
– Catalogs, Internet
• Advanced infrastructure
– Flexible, scalable, cost-effective
• Experienced leadership
• Growth strategy
– Expand store base, grow direct channel, new business
opportunities
• Structural Change Underway
– Industry Consolidation
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