DELRAY BEACH, Florida – Callaway Golf has issued preliminary Q1 results that said the company expects sales of between $438 million and $448 million – compared to $516 million in Q1 of 2019. Callaway’s official earnings report is expected later this month, but this is the first glimpse we’ve received of any major golf equipment company’s numbers during the Covid-19 pandemic.
Callaway’s first quarter sales have traditionally been the company’s strongest, so given the Q1 2020 decline from Q1 2019, that doesn’t bode well for Q2 and beyond. Remember that most of those Q1 2020 sales occurred in January – before the pandemic panic – so there really is no way (publicly) of knowing what kind of sales decline Callaway experienced in February and March 2020.
Callaway President Chip Brewer, however, said that in March, global regulatory responses implementing social distancing and shelter-in-place orders “significantly slowed retail sales’’ and created various business operations challenges worldwide, which “significantly affected,’’ his company’s Q1 financial results after a strong start to the quarter.
Also, Callaway Golf appears to be trying to refinance some debt – most likely from the purchase of apparel company Jack Wolfskin in 2019. The company announced a new $200M convertible senior note offering due in 2026. Callaway said it intends to use a portion of the proceeds to pay the cost of certain capped call transaction, while the remainder is intended for working capital and general corporate purposes.
Titleist and FootJoy parent Acushnet Company reported Q1 sales of $408.7 million, down 5.8 percent. Earnings decreased 74.5 percent versus Q1 of 2019. Each of the those Q1 2020 numbers reflect the impact of the Covid-19 pandemic.
“Asia markets were impacted first by the crisis and are at varying stages of recovery, with Korea nearly fully recovered and other markets working their way towards recovery,’’ said Acushnet CEO David Maher. “North America and Europe were affected in March, and, as one would expect, our businesses there have been significantly impacted over the past six weeks with most golf shops and retail stores temporarily closed. Many of our distribution centers and production facilities remain either closed or are operating at limited capacity due to imposed regulations which are expected to ease over the next month.”
The company reported golf ball sales in Q1 at $116 million, down more than 25 percent versus Q1 of 2019. Golf club sales, however, increased two percent to $93 million, most likely a reflection of early January sell-in.
The Acushnet Company has suspended guidance for future quarters because of the pandemic, but Maher expressed optimism about the golf industry’s future the remainder of 2020.
“In recent weeks, we are encouraged that the overwhelming majority of golf courses, both in the US and around the world, are re-opening for play with golf retail shops not far behind,’’ Maher said. “While the golf industry will clearly be disrupted throughout 2020, we are confident that the underlying fundamentals of the game, with its outdoor field of play and ease of social distancing, will position the game of golf on solid ground for the future.”
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