Thanks in part to the addition for the first time of Topgolf, whose revenues nearly doubled, the revenues of Callaway Golf surged by 208 percent to $914 million in the second quarter ended June 30 as compared to a year earlier, when Covid-19 restrictions and shutdowns had a significant impact. They were 105 percent higher than in the second quarter of 2019, due also to a recovery in its soft goods business, which includes Jack Wolfskin.

Excluding Topgolf, the group’s gross margin declined by 5.6 percentage points to 53.3 percent. Adjusted Ebitda increased by 466 percent to $164 million and was 150 percent higher than in the second quarter of 2019. Net income stood at $92 million, which compared to a bottom-line loss of $168 million in the year-earlier period that included a $174.3 million writeoff for Jack Wolfskin due to a steep fall in sales due to the pandemic.

During the past quarter, Callaway completed the transfer of Jack Wolfskin’s apparel business in-house from its previous licensee for the important South Korean market.

Topgolf, whose takeover was completed on March 8, added $325 million to Callaway’s second-quarter sales and $57 million to its adjusted Ebitda. The operating income of Topgolf, which is now Callaway’s third operating segment alongside golf equipment and soft goods, amounted to $24 million. Excluding Topgolf, Callaway’s golf equipment and soft goods revenues increased by 98 percent to a record $588 million.

Callaways’s revenues from soft goods rose by 115 percent on the year earlier to $187 million in the quarter, driven by increases of 152 percent in apparel sales and 88 percent in gear, accessories and other products. Compared with the second quarter of 2019, segment revenues were up by 21 percent. The segment’s operating income amounted to $16 million versus an operating loss of $12 million the year earlier.

Improvements were registered for both Jack Wolfskin and the Callaway line of apparel. While most European retail locations were negatively impacted by Covid-19 restrictions for a significant portion of the second quarter, Jack Wolfskin’s retail revenues approached their 2019 levels as European stores fully re-opened in the middle of the quarter and the brand’s positioning remained strong in China. TravisMathew posted “incredible” growth, with over 30 percent comparable store sales growth in its own retail stores versus 2019.

For Callaway’s legacy golf equipment business, revenues in the second quarter jumped by 91 percent on the year earlier to $401 million and were 37 percent above the pre-pandemic level reached in the second quarter of 2019. The growth was driven by favorable comparables along with a continued surge in golf demand and participation, coupled with the successful launch of Callaway’s new Epic line of woods and Apex line of irons, plus the continued success of the Chrome Soft line of golf balls. The golf equipment segment’s operating income soared to $98 million from $29 million in the year earlier.

On a geographical basis, Callaway’s overall sales in the U.S. rose by 274 percent to $643 million in the second quarter, boosted by Topgolf’s addition and the resurgence of golf, as seen by continued strong demand for beginner sets. On a constant-currency basis, sales increased by 119 percent to $121 million in Europe, by 155 percent to $62 million in Japan and by 59 percent to $88 million in the rest of the world.

For the full year, Callaway is forecasting revenues of $3,025 million to $3,055 million, about double the $1,590 million reported last year and also well above the $1,701 million generated in 2019. The outlook for the year assumes continued positive demand fundamentals for Callaway’s golf equipment and soft goods segments and no further business, supply chain and retail shutdowns tied to Covid. Topgolf’s sales for 10 months are expected to approach the level of $1.06 billion that the company had reached for all of 2019.

Adjusted Ebitda is projected at $345 million to $360 million versus $163 million in 2020 and $210 million in 2019. Callaway’s outlook also assumes $55 million of supply chain risks due to current Covid shutdowns in Southeast Asia, almost all of which are expected to occur in the third quarter. Supply constraints are not currently expected to affect the fourth quarter or the next year to any significant degree.