Callaway Golf Company has reported a 7.1 percent decline in its revenues for the second quarter, down to $231.9 million, leading to a 63.7 percent drop in net earnings to $3.37 million for the period. The performance was worse than analysts were expecting, but the management indicated that Callaway scored better than the golf market in key countries and stated that it is poised for a return to profitability for the full year, thanks in part to planned new product introductions.
The quarterly sales decline was attributed to high retail inventories and strong promotional activity during the quarter, especially in the U.S. where the golf season got a late start. Callaway pointed out that its sales in the U.S. were up by 5 percent for the first six months of the year, although the U.S. golf equipment market has declined by between 5 and 10 percent so far this year.
A similar pattern occurred in Europe and Japan, where the company says that its sales were down by 2.1 percent and 11.4 percent in dollar terms during the second quarter, but up by 24 percent and 7 percent for the six months. In the rest of Asia, they increased by 9.9 percent in the second quarter and by 21 percent for the first half.
Research indicates that Callaway's market share of the overall golf equipment market grew in the first half by 4.2 percentage points to 19.1 percent in the U.S., by 0.9 percentage points to 14.8 percent in Japan and by 5.5 percentage points to 18.6 percent in the U.K.
In terms of product categories, Callaway's sales of woods fell by 27.2 percent worldwide during the latest quarter. Irons were down by 5.5 percent and golf balls by 10.8 percent, but putters were up by 16.8 percent and accessories by 10.2 percent.
Chip Brewer, president and chief executive of Callaway, said that its local teams have made excellent progress in managing field inventories in the U.S. and Europe. He noted that retail inventories are still a little high in the U.S., but predicted that the company will raise its total revenues for the year to between $880 million and $900 million, compared with $843 million in 2013.
