Callaway Golf has taken a flurry of decisive measures in the last months to sharpen its focus on the Callaway and Odyssey equipment brands. However, the golf equipment company has downgraded its sales guidance for the first half of the year, as the improvements it achieved in the first quarter failed to meet the expectations of its managers.
Callaway's sales reached $285 million for the quarter, a marginal decrease compared with $286 million for the same quarter last year. Its gross profit margin increased by 1 percentage point to 44 percent. Callaway's net income jumped to $32 million, up from $13 million at the same time last year. The income rise was lower on a pro forma basis, excluding factors such as a gain of $6.6 million on the sale of the Top Flite and Ben Hogan brands.
Chip Brewer, Callaway's president and chief executive, said that the company had made significant headway with some of its strategic initiatives, which would enable it to become more focused. Apart from the divestment of Top Flite and Ben Hogan, Callaway has restructured its North American apparel license with Perry Ellis, and settled litigation with Acushnet. Sales increased in the U.S. and Japanese markets. However, Brewer added that the company's sales expansion and financial performance were not improving fast enough, and that more action would have to be taken.
Callaway had previously predicted that its sales would reach from $610 million to $630 million for the first half of the year, but it now expects them to reach between $560 million and $575 million, compared with $559 million for the first six months of 2011. Callaway's gross margin should reach 43 percent for the period, the same as last year, but below an earlier projection of 44 percent.
