Topgolf Callaway lowered guidance after a “challenging” third quarter where like-for-like sales at its driving range venues came in lower than expected, leading to shares in the golf equipment and accessories maker to slump by almost a fifth in after-market trading in the US.
Revenue at its recreational driving range facilities increased 8.2 percent to $447.7 million for the three months to Sept. 30, but this was boosted by sales from new venues. Same-venue sales actually fell 3 percent year-on-year, primarily due to a tough 2022 comparator when there was a post-Covid surge in the corporate events business after lockdown restrictions were eased or lifted.
Golf equipment revenue fell 1.1 percent to $293.4 million, primarily due to an expected shift in the timing of golf club launches to the fourth quarter of this financial year from Q3, as well as a decrease in golf ball sales due to a post-Covid inventory fill-in at retail in the same period last year and was partially offset by an increase in pricing.
In the Active Lifestyle segment, sales rose 7.7 percent to $299.5 million, primarily due to strong double-digit growth at TravisMathew, including new store openings, and growth at Jack Wolfskin.
Total revenue for the period came in at $1.04 billion for the three months to Sept. 30, up 5.3 percent but below expectations of $1.06 billion. Adjusted Ebitda rose 13.1 percent to $163.3 million, while net income fell 14.3 percent to $38.2 million.
The company said it now expected full-year sales of $4.235 billion to $4.26 billion, down from a prior outlook of $4.42 billion to $4.47 billion. Topgolf annual revenue forecasts were cut to $1.74 billion from prior estimates of $1.9 billion, while same-venue sales growth is now tipped to be “down slightly” from mid-to-high single-digit growth. Fourth-quarter sales forecasts were also cut to $847 million to $872 million, below forecasts of around $1 billion.
Chief Executive Chip Brewer said that with current same venue sales trends and foreign exchange headwinds, the company was “taking decisive action to lower both costs as well as capital expenditures and to drive additional synergies across our business. All of this is aimed at de-risking future performance while maintaining our strong growth prospects”.
“We remain on plan to deliver positive free cash flow for the total company and Topgolf this year, and we are confident that we will continue to profitably grow our business this year and going forward,” he added.
