Callaway Golf reported a 6.5 percent increase in net sales to $246 million in the seasonally important second quarter. The gross margin improved by 0.9 percentage points to 45.0 percent. Operating income rose by 12 percent to $21 million and net earnings jumped by 40 percent to $34.1 million thanks to a $18 million gain on the sale of a 10 percent stake in Topgolf. Callaway will keep about 15 percent of the shares in the golf operator.
Sales went up in all the markets and all the product categories. Geographically, the growth was led by a 25.0 percent increase to $40.5 million in Japan, where Callaway has established a joint venture. Sales rose by 4.3 percent to $127.2 million in the U.S., by 5.0 percent to $36.9 million in Europe and by 5.9 percent to $20.8 million in the rest of Asia.
Sales of golf balls jumped by 14.9 percent to $46.9 million. A more moderate increase of 4.7 percent was recorded in golf clubs, including gains of 2.2 percent in woods, 7.0 percent in irons and 2.4 percent in putters.
Callaway claimed further gains in market shares in the U.S., where its relative weakness was attributed to weather conditions and the lack of product launches. The promotional environment has improved in the country, the company added. It expressed some concern about the impact of the Brexit vote in the U.K.
For the first six months of the year, sales were up by just one percent to $520 million. For the full financial year, Callaway sees them rising to between $855 million and $880 million, compared with $844 million in 2015. Pre-tax income should move up to a range of $45-55 million from $20 million.
