TMaG Down – Callaway Up

Nine month financial results for two of the largest golf equipment companies are in and as the saying goes, “There’s good news and bad news.” For TaylorMade-adidas Golf, part of the German based adidas (ADDYY), the news is falling revenues and profits while Callaway Golf (ELY) has seen modest sales increases and a doubling of income compared to the same period last year.

TaylorMade-adidas Golf, including Adams Golf and Ashworth, said revenues declined from $981 million in 2013 to $673 million, “as a result of the continued weakness in the golf market as well as TaylorMade-adidas Golf’s ongoing efforts to clean retail inventories and the timing of new product introductions compared to the prior year period,” according to the company. Margins were also lower and inventory rose due to weaker sales. For 2013 TaylorMade Golf’s sales were approximately $1.6 billion and the forecast is for 2014 sales to decline by double digits. For the past several months the industry leader has been cutting expenses, delayed product introductions, not pursued cutting prices to chase sales and moved Adams Golf from Texas to the corporate headquarters in California.

By way of contrast, Callaway Golf reported results going in the opposite direction with nine month sales increasing 5% ($752 million versus $716 million) and a doubling of operating income to $70 million. They also updated their estimate of sales for the full year to within the range of $880 million to $900 million.

TaylorMade-adidas Golf has been the largest equipment company for the past decade having taken the top spot from Callaway Golf. Acushnet Golf, makers of Titleist golf balls, is privately-held and does not release financial results though it is estimated sales in 2013 to be over $1 billion.

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