Topgolf Callaway Brands, parent company of Callaway Golf, Topgolf, Travis Mathew, Odyssey, Ogio, Jack Wolfskin brands, has reported net revenues of $1.16 billion in the second quarter of the year (April-June), representing a decrease of 1.9% year-on-year.
The decline was reportedly due to a decrease in sales in its golf equipment businesses (Callaway, Odyssey), and the active lifestyle division (Jack Wolfskin), which were partially offset by an increase in Topgolf sales, which enjoyed a revenue boost from the opening of new venues.
The company’s golf equipment sales decreased by $37.2m or 8.2% to $413.8m, compared to Q2 2023, with the decline said to be primarily due to the lapping effect of last year’s Big Bertha woods and irons launch. The company said it maintained its market share top spot in driver, fairway woods and irons with Ai Smoke clubs and continued to drive market share gains in the golf ball sector driven by the new Chrome Tour range of golf balls.
Topgolf revenue increased by 5% year-on-year to $494.4m, driven primarily by new venues. Same-venue sales decline of 8% were below expectations, reportedly driven by softer-than-expected traffic as the business navigates the current cyclical macro challenges.
The disappointing Topgolf figures has led Topgolf Callaway Brands CEO Chip Brewer to announce an immediate strategic review of the Topgolf business model, the results of which he said would be announced as soon as possible.
Speaking about Topgolf Callaway Brands’ latest set of financial results, Brewer said: “Despite macro headwinds, including the cumulative impact of negative foreign exchange trends, persistently high inflation and recent softer-than-expected traffic to our Topgolf venues, I am incredibly proud of our team’s ability to drive market share gains in our products business as well as the continued strengthening of the digital capabilities and fundamental venue profitability at Topgolf.
“As we look forward, we remain convinced that Topgolf is a high-quality business with significant future opportunity. It is transforming the game of golf, and we believe it will deliver substantial growth and financial returns over time. At the same time, we have been disappointed in our stock performance for some time, as well as the more recent same-venue sales performance,” Brewer advised.
“As a result, we are in the process of conducting a full strategic review of Topgolf. This review includes the assessment of organic strategies to return Topgolf to profitable same-venue sales growth, as well as inorganic alternatives, including a potential spin-off of Topgolf. Our strategic review of Topgolf is being conducted with the help of outside advisors and is focused on maximizing long-term shareholder value. We are active in this work at present and expect to complete our strategic review of Topgolf expeditiously. We will report back on this when the work is complete.”
“Our golf equipment results remain strong, especially in the US market, where our club market share continues to lead the industry, and our ball share continues to grow. The successful rebranding and redesign of our premium Chrome Tour family of balls highlights our excellence in R&D and commitment to innovation.”
The company is guiding for a 5.8% year-on-year revenue decline next quarter to $980 million, a reversal from the 5.3% year-on-year increase it recorded in the same quarter last year.