The George Fellows era is over at Callaway Golf Company. Fellows, president and CEO of the Carlsbad, Calif., based equipment company since August 2005, stepped down today citing “personal demands” of cross country commuting and other demands on his personal life my personal life.
Perhaps Fellows’ business life had something to do with the decision, too. Callaway Golf also reported today that it expects to lose $55 million on sales of $270 million the second quarter of this year that ends June 30. The second quarter generally in considered the most significant quarter for most golf equipment companies because those are the heaviest sell-in and sell-through months in the golf industry.
Callaway Golf reported Q1 sales of $286 million and earnings of $23 million.
Since 2006 – Fellows’ first year at the helm of Callaway Golf – the company has seen sales decrease in every year but 2010 when it had sales of $967.6 versus $950.8 in 2009. Under Fellows, the company’s high water mark in terms of sales when it was $1.12 billion.
Callaway’s best earnings year under fellows was in 2008 when the company reported income of $66.7 million. It lost $15.2 million in 2009 and $18.8 million. Given the $55 million loss in Q2 of 2011 and the traditionally slower third and fourth quarters in terms of sales, it’s a safe bet Callaway will lose money again this year, despite the fact the company announced what it termed “organizational changes” in Q2 it said “are expected to improve operational effectiveness and reduce costs.”
Anthony S. “Tony” Thornley has been named Callaway Golf’s Interim President and CEO. Thornley, who joined the company’s board of directors in 2004, served from 2002 to 2005 as president and CEO of Qualcomm Inc., a global leader in wireless technology. He served as Qualcomm’s CFO from 1994 to 2002. Until his appointment today, Thornley served as chair of the Audit Committee of the board of directors of Callaway Golf.
As part of its reorganization, Callaway said it expects to “reduce headcount at all levels” of the organization. The company said it expects its organizational changes and reevaluation of business processes and priorities to deliver annualized pre-tax savings of approximately $50 million, a portion of which will benefit 2011.
“While it is clear that it was the global economic recession that derailed our record sales and earnings pace, it is also clear that our business is not keeping pace with the industry recovery,” Thornley said. “It is therefore necessary for the company to take immediate and aggressive actions to reduce costs in order to return the company to profitability as quickly as possible. We will also focus our efforts on strengthening our Brands by reinvesting a portion of the cost savings in key marketing initiatives.”