Excluding structural changes and foreign currency movements, Callaway Golf's sales shot up by 38 percent in the third quarter ended Sept. 30, with impressive gains of 33 percent in the U.S., 52 percent in Europe, 47 percent in Japan and 45 percent in the rest of Asia. In reported terms, the company's revenues went up by 20 percent to €178.3 million, leading to a significant drop in net losses to $22.9 million from $89.2 million a year ago.
The structural changes include last year's sale of Top-Flite and Ben Hogan and the transition to a licensing mode for apparel in North America. The recent sales gains were partly attributed to a higher number of golf rounds played in Europe and the Americas, thanks to better weather conditions, and the introduction of new products. More will follow, starting with the company's new Apex line of irons in December. A stronger focus will be placed on balls and accessories next year.
In the third quarter, woods made the biggest impact on the turnover, with sales rising by 81 percent to $56.5 million. Irons went up by 27 percent and putters by 30 percent, but balls were down by 4 percent.
Gross margins improved significantly in the quarter, rising to 33 percent of sales from only 3 percent a year ago, and operating losses shrank from a negative margin of 56 percent to a still negative margin of 10 percent. For the first nine months of the year, Callaway managed to book net income of $28 million on sales of $716 million, delivering a gross margin of 41 percent and an operating margin of 6 percent, indicating that the company's planned turnaround is well underway.
