The first-quarter results of Acushnet, the American golf company controlled by Fila Korea, did not meet analysts’ expectations. Sales declined by 5.8 percent to $408.7 million, or by 4.6 percent in constant currencies, due to a decrease in Titleist golf ball sales and FootJoy golf wear, hampered by Covid-19. As with Callaway Golf, which benefited from its acquisition of Jack Wolfskin last year, the evolution of Acushnet’s turnover would have been worse without its takeover of Kjus.
The management of Acushnet expects the virus to have a significant impact on sales in the second quarter and has not released a guidance for the full year, but it remains optimistic that opening golf courses across the U.S. will boost demand in the coming weeks. The company is drawing down $200 million under its revolving credit facility to cope with the impact of the coronavirus epidemic in Europe and North America.
It said all segments performed well until mid-March, when the coronavirus pandemic hit the U.S. and Europe. Its sales in South Korea and Japan have started to recover and its Chinese manufacturing joint venture for FootJoy golf shoes has become fully operational. Ball manufacturing operations have been suspended for eight weeks now, and the company hopes that they can be resumed by the end of May. Manufacturing facilities for Titleist golf clubs and gloves in Thailand have remained open, and so have its online sales operations.
In terms of dollars, the company’s U.S. turnover dropped by 8.4 percent during the quarter, but EMEA progressed by 7.5 percent, primarily due to the acquisition of Kjus, which benefited from the recent launch of a new Gemini rainwear technology featuring a reversible rain jacket to provide the option for both warm and cold weather protection. Acushnet bought the Swiss brand of snow and golf apparel during the third quarter of last year.
Sales grew in Korea, progressing by 9.2 percent, as the country managed to control the pandemic without putting lockdown restrictions in place. However, Japan’s revenues were down by 9.3 percent in constant currencies.
While golf ball sales plunged by 24.1 percent, clubs rose by 2.7 percent. Golf gear inched down by 1.8 percent and FootJoy decreased by 6.5 percent. No breakdown was given for Kjus.
Overall, the gross margin contracted by 2.0 percentage points to 49.2 percent, and adjusted Ebitda fell by 17.8 percent to $52.8 million, indicating a decline in the adjusted Ebitda margin of 1.9 percentage points to 12.9 percent. Net income tumbled by 75 percent to $8.9 million.
