The group, unsatisfied with its stock performance for some time, has tapped an external team of advisors to conduct a full strategic review of its premium Topgolf sports and entertainment venue business. According to President and CEO Chip Brewer, the undertaking’s objective is “to return Topgolf to profitable same-venue sales growth as well as an inorganic alternative, including a potential spin of Topgolf.”
The Topgolf business, Brewer opined, is performing well in two of three key performance drivers currently, venue margins and new venue development. However, its recent results have been below internal objectives, the company reported.
Topgolf Callaway’s share price contracted by nearly 13 percent on Aug. 7 as the company issued annual guidance below consensus estimates. Citing slower consumer activity in H2, the company lowered its revenue outlook for the six months to a 2 percent overall decline. It offered details about the slowing Topgolf business in recent months that is likely to continue through Q3. Same venue sales, projected to be slightly positive, fell 8 percent in June and 11 percent in July although performance in the month’s last two weeks improved. With that result, the company is now forecasting the segment’s sales to fall by “very high single digits to low double digits” this FY.
Operating income fell by 11 percent to $103.0 million from $116.0 million for the period ended June 30. Ebit came in 27 percent lower year-over-year at $52.4 million and net income tumbled 47 percent to $62.1 million from $117.4 million.
Total Q2 revenues slipped by 1.9 percent to $1.16 billion from $1.18 billion, negatively impacted by a reported 8.2 percent drop in Golf Equipment sales to $413.8 million as segment operating income tumbled by 19.7 percent year-over-year to $77.4 million. The Active Lifestyle segment (TravisMathew, Jack Wolfskin) suffered a 3.2 percent sales decline to $249.6 million. Topgolf sales rose by 5.0 percent in Q2 to $494.4 million and generated a 27.5 percent increase in operating income to $56.1 million.
With the results, the group adjusted its FY24 guidance. The consolidated net revenue guidance range was lowered by 4.8 to 5.3 percent to $4.2 to $4.26 billion. The consolidated adjusted Ebitda forecast is now $570 to $590 million, down from prior guidance of $620 to $640 million. Meanwhile, Topgolf’s annual adjusted Ebitda outlook was decreased by 11 percent to approximately $310 million from $350 million previously.
