Topgolf Callaway reported a rise in fourth-quarter revenues and pushed annual earnings forecasts higher after a strong performance from its driving ranges looked set to help cushion weaker demand for golf equipment this year.
Revenue for the three months to Dec. 31 rose 19.6 percent to $851.3 million. For the 12 months group sales rose 27.5 percent to $4 billion.
The fourth-quarter operating loss narrowed by 36.6 percent to $34.7 million in what is a traditionally quiet period, while full-year operating profits rose to $256.8 million from $204.7 million.
Results by segment
Topgolf segment revenue increased 21.9 percent at actual exchange rates to $409.5 million in the fourth quarter from a year earlier, driven by new venues and strong same-venue sales growth of 11 percent, compared with pre-pandemic sales in 2019. The company opened six new owned-and-operated locations during the period.
Golf equipment segment revenue rose 17.7 percent to $190 million, driven by growth in both golf balls and clubs. Volume and pricing more than offset higher input costs and unfavorable foreign exchange-rate impacts.
Active Lifestyle segment revenue was up 17.4 percent to $251.8 million, driven by growth in both the apparel and gear, accessories and other product categories, which offset tough conditions in Europe and China.
Over the course of 2022 the company opened 11 new owned-and-operated venues and two international franchise businesses.
“For the first time, off-course participation surpassed on-course participation, a trend we believe will continue. For every 11 new Topgolf venues we deliver annually, we expect to add approximately three to four million unique visitors,” said CEO Chip Brewer.
Company feeling “very good” about relative position
Looking ahead, the company said it expected 2023 sales to grow 10 percent to $4.415 to $4.47 billion. Adjusted EBITDA is expected to be around $620 to $640 million, up from prior forecasts of $600 million and the $558 million reported in 2022.
Topgolf, which Callaway merged with in 2021, is forecast to drive around $1.9 billion in sales, reflecting its growing popularity.
However, golf equipment sales are tipped to be roughly flat — because of a tough macroeconomic environment, competition and price cutting by retailers as they moved to clear inventories last year, after inflation started to change consumer discretionary spending habits.
Despite this, Brewer said the company still feels “very good about our relative position and competitiveness in this segment.”
For the first quarter, the company forecast sales of $1.135 billion to $1.155 billion, with Topgolf segment revenue expected to be around $400 million. Adjusted segment EBITDA is forecast to be slightly below 2022’s $41.6 million, because of higher marketing spend and a return to full staffing levels at venues.
