NEW YORK (AP) -- Shares of Golfsmith International Holdings Inc. rose Wednesday, a day after the golf and tennis retailer reported second-quarter profit above expectations, helped by sales from new stores.

Late Tuesday, the Austin, Texas-based company, which also operates a golf school, said second-quarter profit rose 26 percent to $8.6 million, or 54 cents per share, from $6.8 million, or 43 cents per share last year.

Revenue rose 4 percent to $130 million from $125 million in the same quarter last year.

Analysts polled by Thomson Financial expected a profit of 48 cents per share on revenue of $127 million.

Revenue was boosted by sales in 12 new stores opened in fiscal 2007. Sales in stores open at least one year, a key retail metric known as same-store sales, rose 0.5 percent. Catalog and Internet sales fell 10 percent.

"Looking ahead, we will continue to focus on controlling our expenses and managing our inventory," Martin Hanaka, chairman and chief executive, said in a statement. "While we are planning conservatively for the second half, we continue to expect our 2008 earnings to show meaningful improvement compared to 2007."

The company affirmed guidance for 2008 of slightly positive overall sales growth and slightly negative same-store sales.

Lazard Capital Markets analyst Todd Slater, who rates the company "Buy," wrote in a note to investors that margins have bottomed out and are likely to rise.

"We see operating margins expanding from 1.6 percent last year to 2.4 percent this year, even if revenue remains pressured," Slater wrote.

Slater said he was encouraged by the company's new product introductions, tighter inventory management, fewer markdowns and slower store openings.

"We continue to view Golfsmith as a best-of-breed specialty golf and tennis retailer that has put growth on hold in favor of margin recovery," Slater wrote.

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