Recession Tee It Up


With all this recession talk weve been hearing, youd think companies in leisure industries would be nervous. But thats not necessarily so.
If we have new, innovative products out there, well hit our numbers, said Mark King, president of TaylorMade-adidas Golf. That brand of optimism is easier to find now than golf-market gloominess, at least on the supply side of the industry.
Thats not to say that companies arent watching costs. But dont expect massive promotional pull-backs or layoffs at golfs biggest equipment companies.
The question is, how big a recession is it, said Ping chief John Solheim. Its a hard one to read. Ive never been through a great depression, and I dont think the economy is headed that way now.
Solheim questions whether there will really be a recession. He also is unconcerned about the supposed direct connection between economic indicators and leisure spending.
In Japan, golf spending usually goes up in an economic downturn, Solheim said. He speculated that the hard-working Japanese might have more time for golf when production demands flatten.
Despite recent stormy forecasts for Japans highly leveraged, real-estate-inflated economy, TaylorMade is breathing a sigh of relief because of its overseas sales.
Business is absolutely booming in Japan this year, King said. We might double what we did there last year.
Imitators of TaylorMades 300 Series woods, with their low, medium and high flight paths, have cropped up in the Orient, King said. That may be irritating from an intellectual property point of view, but its usually the sincerest form of flattery with respect to demand.
A savvy parent company such as adidas is a helpful ally, King said. But despite the green lights in major markets, TaylorMade and other companies have their feet poised over the brake pedal, just to be safe.
In our business planning, we look quarter-by-quarter at controlling expenses, King said. Advertising is an obvious first target, and indeed there are tales of buyers market behavior among some advertisers with respect to their print and television plans. But hiring and marketing programs could be trimmed slightly to save money too, King said.
And doesnt that raise the challenge of striking a balance between necessary competitive promotion (March is not a good time to have your brand name disappear) and cost control (months containing 28 or more days are not good times to go broke)?
Certainly, King said.
Ping has set up its business to remove at least one problem. The companys custom-built element essentially eliminates sizable inventories, which irritate retailers. Aside from some minimal stock on hand, Ping sells every stick it builds because it doesnt build on spec.
Thats one reason Solheim is confident of the chances of reaching or surpassing the companys performance in 2000, which was a record year for Ping. Wood sales, he said, are leading the way.
Spalding Sports Worldwide has done well early on with its new golf ball, the Strata Tour Ultimate. But caution blended with optimism is the order of the day.
Yes, we are taking a couple of actions that we think are prudent right now, said Eddie Binder, director of marketing for Spalding, in a March 29 conference call with the golf press. What we have done is to really make sure on the marketing spending front that we're going to commit the major dollars to the brand of Ben Hogan and Strata, which we believe to be our biggest opportunities. And we're looking right now at tightening a little bit on our advertising and promotional spending as a hedge against any sort of market conditions.
Of course, you can batten down all the hatches you want. Theres no knowing the full extent of a storm until it hits. So a lot of people will be watching their e-mails very carefully to see when the second quarter numbers come out in early July.