Topgolf Callaway Brands lowered its annual sales outlook and confirmed the likely strategy for its Topgolf venue business in 2025 when reporting its Q3 results. Operating income tumbled 54 percent to $33.7 million from $73.8 million for the three months ended Sep. 30. The net loss was $3.6 million against a profit of $29.7 million on a 2.7 percent decline in total revenues to $1,012.9 million from $1,0406 million. The sales dip was attributed to an 11 percent contraction in Active Lifestyle sales, which was partially offset by a 1.2 percent sales increase at Topgolf. The results exceeded the company’s guidance range for the period.
| Topgolf Callaway Brands | |||
|---|---|---|---|
| 2024 | 2023 | Change | |
| Three months ended Sept. 30 ($ million) | |||
| Net revenue | 1,012.9 | 1,040.6 | -2.7% |
| Costs and expenses | 979.2 | 966.8 | 1.3% |
| Income from operations | 33.7 | 73.8 | -54.3% |
| Pre-tax | -23.0 | 26.7 | – |
| Tax | -19.4 | -3.0 | -546.7% |
| Net income | -3.6 | 29.7 | – |
| Diluted EPS | -0.02 | 0.16 | – |
| Nine months ended Sept. 30 ($ million) | |||
| Net revenue | 3,314.9 | 3,387.7 | -2.1% |
| Costs and expenses | 3,111.3 | 3,117.4 | -0.2% |
| Income from operations | 203.6 | 270.3 | -24.7% |
| Pre-tax | 40.9 | 119.1 | -65.7% |
| Tax | -24.1 | -53.0 | 54.5% |
| Net income | 65.0 | 172.1 | -62.2% |
| Diluted EPS | 0.35 | 0.88 | -60.2% |
| Source: Topgolf Callaway Brands | |||
The group, which is on track to open seven newly owned Topgolf venues in 2024, saw the segment reach $453.2 million in Q3 sales and a 27 percent decline in operating profit to $28.3 million. President and CEO Chip Brewer told analysts that the company is “fully engaged” in the process of separating the business by evaluating both a spin-off and an outright sale. If Topgolf is spun off as a separate publicly traded company, the action would likely take place in mid-2025.
With the Q3 results, Callaway adjusted its full-year revenue guidance to the lower end of its previous outlook at $4.2 billion due to “lower than expected consumer activity” in the period. Brewer referred to the slower activity as “short-term volatility rather than a trend.”
More details on Q3 results
Golf equipment sales were flat at $293.5 million versus $293.4 million with US club market sellthroughs bouncing back in the second half of September and in October. Meanwhile, Callaway’s golf ball US market share rose by 140 basis points to 21.8 percent. However, the ball business faced some challenges, including currency exchange impact and volatile freight rates. The Q3 operating profit for the golf equipment segment slipped by 24 percent to $26.8 million from $35.2 million.
| Topgolf Callaway Brands | ||||
|---|---|---|---|---|
| 2024 | 2023 | Change | ||
| Three months ended Sept. 30 ($ million) | ||||
| Categories | ||||
| Venues | 428.9 | 430.5 | -0.4% | |
| Topgolf other | 24.3 | 17.2 | 41.3% | |
| Golf clubs | 226.0 | 222.2 | 1.7% | |
| Golf balls | 67.5 | 71.2 | -5.2% | |
| Apparel | 180.6 | 211.7 | -14.7% | |
| Gear, accessories & other | 85.6 | 87.8 | -2.5% | |
| Net revenues | 1,012.9 | 1,040.6 | -2.7% | |
| Regions | ||||
| US | 724.6 | 737.3 | -1.7% | |
| Europe | 136.6 | 149.5 | -8.6% | |
| Asia | 127.0 | 130.7 | -2.8% | |
| Rest of world | 24.7 | 23.1 | 6.9% | |
| Net revenues | 1,012.9 | 1,040.6 | -2.7% | |
| Segments | ||||
| Topgolf | 453.2 | 447.7 | 1.2% | |
| Golf Equipment | 293.5 | 293.4 | 0.0% | |
| Active Lifestyle | 266.2 | 299.5 | -11.1% | |
| Net revenues | 1,012.9 | 1,040.6 | -2.7% | |
| Nine months ended Sept. 30 ($ million) | ||||
| Categories | ||||
| Venues | 1,308.3 | 1,270.4 | 3.0% | |
| Topgolf other | 62.1 | 51.6 | 20.3% | |
| Golf clubs | 882.1 | 913.3 | -3.4% | |
| Golf balls | 275.1 | 274.8 | 0.1% | |
| Apparel | 485.2 | 531.3 | -8.7% | |
| Gear, accessories & other | 302.1 | 346.3 | -12.8% | |
| Net revenues | 3,314.9 | 3,387.7 | -2.1% | |
| Regions | ||||
| US | 2,444.9 | 2,435.1 | 0.4% | |
| Europe | 392.1 | 423.3 | -7.4% | |
| Asia | 363.7 | 419.1 | -13.2% | |
| Rest of world | 114.2 | 110.2 | 3.6% | |
| Net revenues | 3,314.9 | 3,387.7 | -2.1% | |
| Segments | ||||
| Topgolf | 1,370.4 | 1,322.0 | 3.7% | |
| Golf Equipment | 1,157.2 | 1,188.1 | -2.6% | |
| Active Lifestyle | 787.3 | 877.6 | -10.3% | |
| Net revenues | 3,314.9 | 3,387.7 | -2.1% | |
| Source: Topgolf Callaway Brands | ||||
Period sales for the Active Lifestyle segment, which includes TravisMathew and Ogio, fell to $266.2 million as its year-over-year operating profit tumbled by 52 percent to $19.4 million from $40.0 million. The company cited lower European wholesale revenues from its Jack Wolfskin business as the main contributor to the $33.3 million sales drop-off.
Regionally, Q3 sales in Europe declined by 8.6 percent year-over-year to $136.6 million; fell by 1.7 percent in the US to $724.6 million; dipped by 2.8 percent in Asia to $127.0 million; and rose by 6.9 percent in Rest of World to $24.7 million.
