Golf has seen a renaissance during the COVID-19 pandemic, as more people take up the game as a safe way to get outdoors after lockdowns.
And that resurgence helped Carlsbad’s Callaway Golf post higher sales in the fourth quarter than a year earlier.
But the pandemic also continues to raise costs for the company and hold back its apparel businesses, particularly in Europe. The result was a wider loss for the seasonally slow quarter.
“The market in golf is obviously experiencing unprecedented demand right now,” said Callaway Chief Executive Chip Brewer in a conference call with analysts. “And clearly, soft goods are causing more volatility because soft goods are more impacted by COVID.”
Callaway Golf’s new Apex irons
(Callaway Golf)
Callaway said Wednesday that fourth-quarter revenue rose 20 percent year over year to $375 million.
The company swung to a loss of $41 million, or 43 cents per share, for the quarter. That compares with a loss of 31 cents per share for the same quarter last year under Generally Accepted Accounting Principles.
Golf equipment was bolstered by increased participation in the U.S. and worldwide. Golf rounds played in the U.S. rose nearly 14 percent last year, according to industry research firm Golf Datatech.
In addition, Golf Datatech reported U.S. retail sales of golf equipment, specifically clubs and balls, were up 59 percent during the fourth quarter, said Brewer.
In apparel, Callaway’s TravisMathew golf shirts and Jack Wolfskin outdoor clothing rebounded a bit during the quarter. Sales grew 8.7 percent compared with the same period a year ago.
But for the full year, the pandemic slowed down Callaway’s apparel expectations.
Overall sales came in at $1.589 billion, down from $1.7 billion in 2019. The company lost $127 million for the year under Generally Accepted Accounting Principles, compared with a $79 million profit the prior year.
In October, Callaway said it plans to buy the remainder of driving-range chain Topgolf Entertainment Group, providing a potential new source of growth.
The deal values Topgolf at about $2 billion. An investor in Topgolf since 2006, Callaway already owns 14 percent of the company.
Topgolf driving ranges — which feature food, drinks and electronic games — are seen as a way to bring younger players into the game.
Topgolf shareholders have already given the go-ahead to the deal, said Brewer. Callaway is holding a special shareholders meeting on March 3 to approve the transaction.
Looking ahead, Callaway expects to continue to face headwinds in the current quarter in its apparel business stemming from shutdowns in Europe and Asia. Conditions should improve for the rest of the year.
Callaway’s golf equipment business is forecast to continue to see strong demand. But club sales could be hamstrung in the short term by temporary supply and logistics shortages cause by COVID-19. The company believes it can recoup any lost sales starting in the second quarter.
Callaway released fourth-quarter and full-year financial results on Wednesday after markets closed. Its shares ended trading down 3 percent on Thursday at $30.66 on the New York Stock Exchange
