Callaway Golf Company says it will reduce its work force by 12 percent as part of cost-reduction initiatives that are expected to generate approximately $52 million in gross annualized savings. The company said the reduction will impact “all regions and all levels of the organization” and supports its plans to streamline operations and “sharpen the focus” placed on the core product lines of the Callaway and Odyssey brands.
The employee reduction is the latest in a string of strategic moves made by new President and Chief Executive Officer Chip Brewer to turn around Callaway Golf, which had been struggling under former president George Fellows.
Brewer also provided preliminary second quarter and first-half results for 2012, as well as guidance on the balance of the year.
“As I mentioned last quarter, the company’s business has not recovered at a satisfactory pace and we are taking actions to accelerate the recovery,” Brewer said. “The cost reduction initiatives we announced today are part of those actions and are consistent with the significant changes we are making in streamlining and simplifying our organization and in how we approach and operate our business. These changes, however, will have a greater impact on our financial results in 2013 and 2014 than on 2012. As a result, and given the slower than anticipated pace of recovery, we no longer expect that 2012 full year financial results will be significantly better than last year. At this point, we expect for full year 2012 a pro forma loss per share of $0.55-$0.75.”
Based on current information, the company estimates net sales for the second quarter ended June 30, 2012 of $280 million, an increase of three percent compared to the second quarter of 2011. First half 2012 net sales are estimated at $565 million, a one percent increase compared to the same period in 2011.
“I am pleased with the progress on the changes we are making to our business,” Brewer said. “In the last few months, we have sold the Top-Flite and Ben Hogan brands, licensed our North American apparel business, licensed our footwear business to our current footwear partner, and have made significant changes in senior management, including new hires to oversee our global marketing and global operations organizations.
“Furthermore, the actions we are announcing today will better align our cost structure with our current business and the changes we are making to our sales and marketing strategy will position us for sales growth in 2013 and beyond.”