Bankrupt 2nd Swing closing its doors

September 26, 2006

The Plymouth-based retailer of used golf equipment is closing its stores as it goes into bankruptcy. Liquidation sales could last months.
The saga of 2nd Swing Inc., a fast-growing golf retail chain, has nearly come to an end.
Stung by a nationwide slump in golf equipment sales and increased competition from larger merchants that began to cut into its core business of selling used clubs, the Plymouth-based retailer will close its more than 50 stores in order to raise money for creditors as 2nd Swing moves into bankruptcy.
Golf participation has been in the rough for the past five years, yet the number of stores selling golf gear has mushroomed.
“Eventually, something had to give,” said Michael Turnbull, director of golf business at TeeMaster Corp., an Internet-based golf-course reservation and marketing company.
A federal bankruptcy judge in Minneapolis approved a plan Thursday for the complete liquidation of 2nd Swing’s stores, including its four Twin Cities locations. The company had filed Aug. 23 to reorganize itself.
The company had been negotiating to sell itself to a Denver-based private equity firm, Gart Capital Partners, which owns stakes in sports equipment companies. The two companies had a signed letter of intent and a purchase agreement. But the deal fell apart a week ago after Gart did its due diligence, leaving 2nd Swing with no choice but to liquidate.
“Each day or week that went by, in which the company was exploring a sale possibility, it was also losing money,” said James Baillie, a Minneapolis attorney representing 2nd Swing.
There are no closing dates yet for the stores. Merchandise will be sold at discounts until everything is gone, Baillie said. The whole process will take as long as 10 weeks, he said.
2nd Swing was founded in 1997, just as millions of new golfers were taking up the game and exciting new products — from oversize drivers to $400 range finders — were hitting the market. The retailer took advantage of the golf boom by opening stores at a healthy clip. By the fall of 2005, it had 77 stores, mostly in the Midwest.
But an industrywide slump hit after the Sept. 11, 2001, terrorist attacks, leaving the golf-equipment business in the rough. In Minneapolis, the number of weekend golf rounds played at public golf courses has fallen 34 percent, to 38,332 in 2005 from 58,569 in 2001.
“It’s a cultural thing,” Turnbull said. “Golf is pretty slow. And with the advent of the Internet and [personal digital assistants], people will set aside an hour, but they’re less willing to set aside five hours” to play 18 holes of golf.
Even so, the liquidation is a dramatic reversal for a retailer that just a year ago was still adding new stores at a fast pace. In 2004, 2nd Swing raised $14 million from Minneapolis-based Oak Investment Partners and an undisclosed venture capital firm, and in 2005 it raised $3.5 million from Oak and another firm, Invesco Private Capital.
During liquidation, customers who hold store credit vouchers can redeem them for merchandise. Holders of store credits who don’t redeem them for merchandise will become unsecured creditors in the bankruptcy case.
So far, golf enthusiasts have wasted little time taking advantage of the discounts. The Bloomington 2nd Swing store was crowded during the lunch hour Monday with shoppers who had already heard about the liquidation or had seen the huge “Going Out of Business” signs on the front window. One customer asked if he could buy the large net that surrounded the store’s practice tee.
John Griffin, a truck driver from Broken Arrow, Okla., stopped into the store after delivering a semitrailer full of clothes to a nearby Kohl’s store. He was disappointed that the 2nd Swing store didn’t have what he was looking for — a Ben Hogan pitching wedge from the early 1970s — but he was impressed by the inventory. “They have a lot of merchandise that you can’t find anywhere else,” he said.
The store’s sales manager, Dan O’Malley, had already assembled about $15 in a jar that said, “Tips — going out of business means will be unemployed very soon.” Just a week ago, he had planned to move to Phoenix to manage a 2nd Swing there. “It’s too bad,” he said. “I think we had a pretty good thing going, while it lasted.”
Source: startribune.com

Posted in Golf News