What is Callaway Doing Right?

May 13, 2008

Clubmaxx Logo

It seems that everywhere you look, golf retailing stinks. Pure plays like Golf Galaxy and Golfsmith are sucking wind big time with no end in sight. Yet, Callaway, the venerable equipment leader, is doing quite well thank you very much. Why?

Unlike Golf Galaxy and Golfsmith who are only located in the United States market, Callaway is an international brand and can shift their marketing focus to countries that are growing like Korea, Japan and China. They can also benefit from currency exchange rates. Things don’t seem to be looking up for Golf Galaxy and Golfsmith, but it does for Callaway. Here are the most recent quarterly results (April/May) for each company:

Dicks/Golf Galaxy — Comparable store sales for Golf Galaxy on a 13-week to 13-week proforma basis decreased 8.8 percent, or 9.8 percent after adjusting for the shifted retail calendar. In contrast, the parent, Pittsburgh-based retailer Dicks Sporting Goods reported net sales of $3.89 billion, up 25 percent from $3.11 billion the previous year. Net income increased to $155 million compared with $112.6 million a year ago.

Golfsmith — For the quarter ended March 29, the company lost $5.4 million , or 34 cents per share, compared with a loss of $4.9 million, or 31 cents per share, a year ago. Revenue grew 2 percent to $79.2 million from $77.7 million, in the year-ago period. Golfsmith said its results came in below its expectations due in part to a decline in rounds played and the challenging economic environment.

Callaway Golf — Callaway Golf posted quarterly earnings that beat Wall Street estimates and said it now sees full-year profits at the low end of its previously forecast range. The company, which has been cutting costs and making its operations more efficient, said first-quarter net income grew to $39.7 million, or 61 cents per share, from $32.8 million, or 48 cents per share, a year earlier. Revenue for the quarter was $366.5 million, up nearly 10 percent. Among other things, Callaway said revenue got a boost from foreign currency exchange rates.


Bookmark This Post: [Digg] [del.icio.us] [Slashdot] [Reddit] [Facebook] [Technorati] [Google] [StumbleUpon]

Written by Bruce Stasch · Filed Under Products, Retailing | Leave a Comment