Challenges remain as Topgolf Callaway's total revenues decline by 4.5%

The group, ready to unload its Jack Wolfskin business to Anta Sports by Sep. 30, has lowered its estimated guidance for its Topgolf venue business in FY25 due to near-term challenges, which include the possibility of further slowing of consumer activity. But Topgolf Callaway Brands is maintaining its annual adjusted Ebitda guidance for the segment, citing cost-cutting and operational efficiency improvements.

In Q1 ended March 31, group operating income was flat at $66.5 million year-over-year as total revenues declined by 4.5 percent to $1.09 billion due to a “right-sizing” of the Wolfskin business and unfavorable currency impact. Ebit expanded by 1 percent to $11.6 million and adjusted Ebitda increased by 4 percent to $167 million as profitability rose in both the golf equipment and active lifestyle segments.

But the Topgolf venue segment suffered a 7 percent drop in Q1 revenues to $393.7 million and an $11.9 million operating loss. Besides working on cost reductions, the company is working on value-oriented, traffic-driving promotions for the business for the months ahead.

Still, CEO Chip Brewer warned investors that “the risk of a further slowing of consumer activity has certainly gone up.”

Elsewhere, the golf equipment segment produced a 24 percent increase in Q1 operating income to $101.6 million despite a 1.4 percent contraction in year-over-year sales to $443.7 million that was caused by unfavorable currency impacts and a more competitive launch environment for new products. The active lifestyle segment realized a 6.1 percent decline in quarterly sales to $254.9 million as continued growth in China was unable to offset the planned rightsizing of the Wolfskin business.

Topgolf Callaway brands FY25 guidance has been maintained. Consolidated net revenues are forecast at $4.0 to $4.185 billion despite a projected 6 to 12 percent drop in Topgolf same venue sales growth. Consolidated adjusted Ebitda is estimated at $415 to $505 million, a decline from the $588 million achieved in FY24. The company currently estimates its unmitigated impact from tariffs will be $25 million, instead of the $5 million forecasted previously.