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Is a Cold Wind Blowing Through the Golf Industry

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WORRY AT THE COMMAND POST: Usually, we hear rumblings of golf industry discontent first from the trenches, the golf retail stores. And although retailers would always be happy if they were selling more, lately its the execs at the original equipment manufacturers (OEMs) who are furrowing their brows in unison.
 
No one wanted to be quoted on the record about this, but theres a lot of worry about how 2001 will turn out. Some say it could be as bad as 1998, when even the biggest companies had to batten down their hatches and readjust earnings forecasts downward.
 
The numbers dont tell a clear story. Rounds played, long accepted as the primary driver of golf ball sales, have been down more than 5 percent year-to-date versus 2000, says Golf Datatech, the Kissimmee, Florida-based industry measurement company. In May alone, rounds were down 1.8 percent, and in at least two months this year, the numbers were down in all 15 regions of the United States that Datatech measures.
 
Yet golf ball sales are better in 2001 than they were a year ago, both in dozens sold and dollars. In May, for example, 2.5 million dozen balls moved, said Datatech, a 2.9 percent jump from May 2000. Dollar sales were up 6 percent to $65.1 million.
 
Whats with the goofy numbers? Theories abound. Some say the rounds numbers are a result of trashy weather this spring; others say the golf industry is too quick to blame the weather, and that a claim of weather woes is safe because its hard to dispute. There is also the possibility that the rounds numbers are accurate, but some other force is artificially driving ball sales: Casual experimentation may be leading consumers to try Pro V1s, CBs and MC Ladies.
 
If those dire theories are true, the product pipeline is overfilled in many segments, and there wont be enough retail sales to empty it out in time for strong wholesale activity in the second half of the year. Private comments from industry leaders indicate expectations of storm clouds on the sales horizon.
 
There have been some bright spots: Adams Golf had a good second quarter, with sales of more than $18.7 million, a 51 percent increase over the second quarter of 2000. But the company is still in the red, although not so deeply. And Callaway Golf had a record first half, with sales jumping 6 percent to $515 million. But the second quarter numbers were down; sales were just under $254 million, a 13 percent decrease from the $290 million in sales for the second quarter of 2000.
 
Seen from one point of view, every cloud seems to have a black lining, at least for now. Caution is in the cold wind, and if anything is selling well, its probably nails ' for battening down hatches.