Callaway Golf’s had 17 percent sales decline to $302 million in the second quarter ended June 30 was a drop of 12 percent in constant currencies. The gross profit margin was down by 10.4 percentage points to 36.3 percent due to heavy retail promotions and a consumer shift to lower-priced items. Quarterly net income plunged by 81.4 percent to $6.9 million.
All product categories had drops in turnover. Woods were down by 12 percent to $76.0 million; irons fell by 28 percent to $72.2 million; and putters dropped by 20 percent to $26.4 million. Sales of balls decreased by 22 percent to $58.2 million and accessories and other products fell by 5 percent to $69.4 million.
Geographically, too, all regions recorded declines. European sales fared the worst, down by 41 percent (in dollars) to $42.5 million, and Japanese revenues were down by 20 percent to $37.1 million.
The U.S. dropped by 7 percent to $163.7 million, the rest of Asia decreased by 3 percent to $21.3 million, and other foreign countries fell by 24 percent to $37.6 million. China and South Korea saw strong growth, and Japanese sales started to pick back up in July. It said sales in Europe seem to have stabilized.
For the first half of the year, turnover fell by 22 percent to $574 million, or a 16 percent drop on a currency-neutral basis. Gross profit margin fell by 8 percentage points to 39 percent, and net income was down even more precipitously, by 82.1 percent to $13.2 million.
Again for the six months, all product categories and geographic regions had decreases. Woods were down by 23 percent, irons by 30 percent, putters and ball each by 20 percent and accessories and other by 9 percent. Nonetheless, Callaway said it gained 3 share points in woods and more than 2 points in the U.S. irons market.
Turnover in Europe for the first half was off by 38 percent, Japan by 15 percent, the U.S. by 15 percent, the rest of Asia by 22 percent and other foreign countries by 28 percent.
Two weeks ago, Callaway gave full-year guidance of a 15-17 percent drop in sales, with gross margins at 38-40 percent, compared with 40-42 percent that was previously expected. The third and fourth quarters are expected to remain highly promotional.
