Callaway Golf Company has started its restructuring plan in the post-George Fellows era. Hopefully it’s not too late after six-plus years of poor leadership by Fellows, who resigned earlier this year.
The company said the restructuring plan is expected to result in annualized gross pre-tax savings of approximately $50 million. Callaway, which reported second quarter sales of $274 million and a loss of $20 million), said it will “reinvest up to half” of the savings in incremental brand and demand creation initiatives. That’s got to be good news for Callaway fans and investors, although the problem hasn’t been so much in brand creation as it has been demand creation (read: marketing) initiatives.
The company’s restructuring plan involves (1) streamlining the organization to reduce costs, simplify internal processes, and increase the focus on the Company’s consumer and retail partners, (2) realigning the organization to place greater emphasis on global brand management and to drive the Company’s key global initiatives, and (3) incremental investment in the brand and demand creation initiatives to drive sales growth.
The company, based in Carlsbad, Calif., last week eliminated approximately seven percent of its positions globally across all levels.
“The financial results this year ($559 million in sales and $29 million in earnings the first six months of 2011) were disappointing, and we wanted to waste no time in beginning the process of reversing that trend,” said Callaway Golf interim chairman Tony Thornley. “I am pleased with how quickly we have been able to develop and begin implementing our restructuring plan.”
But there is still a long way to go.