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Home Daily Golf Briefs Daily Pulse for August 7, 2017

 

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Web Street Golf Daily Pulse
VOLUME 7, NUMBER 153                                                       
Monday, August 7, 2017

ANY IDEA WHO SAID THIS? “We did a show on the 59 where Annika Sorenstam talked about it. I'll tell you what, talk to her for 20 minutes, and you figure out why she won 100 golf tournaments. It's not hard to figure out. She talked about the zone a little bit, how it was 100 percent being in the present. Meaning that the outcome is irrelevant. I had a putt on 18, a 15-footer, the putt goes in the hole, that's a future event that you're not concerned with. What you're concerned about is reading it, getting comfortable, and hitting it soft. If it goes in, it goes in. That's a future problem. So when you say staying in the present, the present, now. Not one shot in front of that. That's really what I did a good job of especially down the stretch, when it started getting -- I think I finished birdie, birdie, birdie, eagle. More crazy stuff happened the last four holes but I was able to just accept where I was and hit the next shot and not concerned -- I think that's really what the zone is.”

BRAIN TEASER: Jimmy Walker won the 2016 PGA Championship. Can you name the last American to win it prior to Walker?

DATA POINTS: It’s been a steady climb for Callaway Golf. The company continues to post gains in market share in the U.S. and around the world. “Our hard goods market share year-to-date through June was 26.4%, up 400 basis points year-over-year, and we've held the number one dollar market share position in total clubs, driver, fairway, hybrid, and irons, as well as the number one unit position in putters,” said Callaway President and CEO, Chip Brewer. “Our year-to-date ball market share was 13.4%, up 50 basis points versus last year, driven by growth in the green grass channel. The U.S. market for balls and clubs combined was down slightly year-to-date, with balls up slightly and clubs down slightly. We are anticipating improving market conditions through the balance of the year.”

Sometimes numbers can be tricky to understand. For some perspective on Callaway’s progress, let’s take a quick look back on its journey. In the second quarter conference call of 2013, it reported 14.9% year to date hard goods share. In North America, the 2014 season got off to a tough start due to early weather issues along with excess inventory, which combined to create a highly promotional environment. As a result, Callaway estimated the US hard goods market was down mid to high single digits that year through six months. In 2015, Callaway’s US hard goods dollar market share through June was 21.4%. Last year, the company’s hard goods market share through Q2 was 22.4%.

“The U.S. industry growth was basically down 4% through the first half (2017) according to most sources,” said Brewer. “And that's measuring the channels of green grass and specialty retail, and it was up significantly at green grass and down significantly at retail although most retailers you talk to are doing quite well. And it was down because of the removal of Golfsmith which was the largest player in that channel,” he continued. “I think that you're going to see in the second half an improvement on that number. I think you're going to see continued strength at green grass and I think that the Golfsmith effect, we were already starting to have that occur, because Golfsmith during the second half of last year was in financial distress. Their stores and their practice, et cetera will start to work its way out of the market, if you would. This is a very difficult year to just look at the data in its raw form and make sense out of it because of the removal or the influence of the Golfsmith business in the numbers.”

Looking around the world, Brewer shared Callaway’s progress in other geographies. “Our Asia business also has had a strong quarter, led by Japan. Our revenues from the Japan market were up 18% during the quarter, and are up 18.2% year-to-date, driven by the addition of our Callaway Apparel JV and strong market share performance in our core equipment business, and partially offset by soft market conditions in Japan,” he revealed. “Through Q2, our year-to-date hard goods dollar share was 20.5%, up 510 basis points year-over-year, and we were both the number one hard goods and the number one driver brand in this market,” he continued. In 2015, it was 16.2% for the same period, but went to 15.4%, last year.

“Year-to-date market share data through May for Europe shows us at 25.8% hard goods share, up 470 basis points year-over-year, and the number one driver, wood, and hard goods brand in that market. It also shows considerable growth in our golf ball share,” Brewer said.

Callaway’s CEO offered his outlook on world equipment markets for the remainder of the year. “The European market is up nicely this year. And so we're expecting that to continue. Asia is down year-to-date as a market and we're, in essence, expecting that to continue. The U.S. is down slightly through the first half of the year. But if you look at that, it's down significantly in the off-course channel and up significantly at green grass. The down that is in the off-course channel is, in essence, the exit of Golfsmith. And so, you've seen that have a significant effect on the market, as it should. We were fortunate that DICK'S picked up a portion of that business, but it didn't pick up all of the locations. And you see that working to the favor of the remaining golf retailers, but the overall market size has decreased. The overall economic situation in the U.S. is a positive and hence I think that you'll see improved results through the second half of the year.”

RAGS TO RICHES! Callaway Golf is taking another run at the apparel market with buying Travis Mathews. The company doesn’t intend to take over the day-to-day operations once the deal has closed. “We spent considerable time getting to know the core management team at Travis and we're looking forward to partnering with them to continue to develop their business. Given our confidence in their team, we have no plans to consolidate the operations of this business, but will instead continue to operate it as an independent brand and subsidiary,” said Chip Brewer, Callaway Golf’s President and CEO. “They have been growing at double-digit rates and we believe are well positioned to continue on this path. The vast majority of their current revenue comes from inside the U.S. and primarily in golf distribution channels. We believe there is ample growth opportunity in these channels, as well as significant potential outside of the U.S. and outside of golf-specific product and channels,” he continued.

Callaway reported TravisMathew's 2017 net sales are expected to be in the range of $55-60 million. “The TravisMathew brand right now is primarily golf-specific. It has a little bit of business in some channels that are not golf, but vast majority of the revenue is golf and golf channels. We believe strongly that the brand can grow outside of just that area, both domestically and internationally. They have very attractive gross margin and growth rates. And the core of that business is such that we don't think it'll detract from our core business, but it might even be additive,” Brewer said.

“We're in apparel in three different ways in three different areas of the world right now, or at least a little presumptive there, assuming we close TravisMathew. In Asia, we have a joint venture with TSI over there, and it was a unique opportunity and structure that fit that market in time and it's going very well. We're very pleased with it,” Brewer noted. “Back in 2012, we created the partnership with Perry Ellis that extends on the Callaway apparel line both in the U.S. and Europe. And that has been very successful and we're very positive on that and that ongoing relationship, and now the TravisMathew opportunity. These are select approaches based on different circumstances, and I think all of them create the right opportunity, and we're bullish about each of them, although they're different approaches.”

WE SALUTE YOU! Caddy For A Cure (CFAC), the nonprofit program that provides funding and support for wounded, veteran and active duty military through the game of golf, has announced the upcoming participation of two wounded heroes for participation at the Northern Trust Open and the BMW Championships. Through the donations from two individuals who will be Caddying For A Cure at the events, Army Master Sergeant Todd Nelson (ret.) will be the military caddy escort for former world #1 Rory McIlroy at the Northern Trust Open, and First Lieutenant Ed Salau (Ret) will be the military caddy escort for Open Champion Jordan Spieth at the BMW Championship.

Russ Holden, CFAC founder and CEO, commented, “Our program in professional golf offers behind the scenes and on-course experiences for golf fans with the world’s best players, while generating support for our wounded and active military. Through these unique caddy experiences purchased by donors, we are able to generate support and engagement in the game for our military.” Holden continued, “We are especially excited about the upcoming Northern Trust Open and BMW Championships with Rory McIlroy and Jordan Spieth, who have both been very supportive of our program and it is an honor to have the inclusion of these two highly esteemed military heroes for the experiences. Ed Salau adds a very unique twist to mix and will set history as he caddy’s for Spieth. In February of 2016, Salau was the first human to receive a procedure called percutaneous osseointegration prosthesis, a device that has dramatically improved his quality of life from that with his traditional prosthetic.”

Salau’s story has been featured on Nickelodeon, Inside the NFL, CNN and numerous other outlets. He has received the Bronze Star Medal, Purple Heart, Meritorious Service Medal, Army Commendation Medal, and the Navy and Marine Corps Achievement Medal with two (2) gold stars. Retired 1LT Salau is a Cum Laude graduate of Southern Illinois University and is a Masters Degree recipient of Boston University. After serving 11 years in the Marine Corps, 1LT Salau had re-enlisted in the Army National Guard and was mobilized for duty in Iraq. He had spent his entire adult life serving his country but on November 15, 2004, his life in the military was tragically interrupted when two rocket propelled grenades hit his Bradley fighting vehicle. Salau received second degree burns to his face and ultimately lost his left leg below the knee as a result of the attack.

Todd Nelson (Ret) served 17 years on active duty and was wounded in Afghanistan when he was hit by a suicide bomb that detonated less than ten feet from him. His life was instantly changed as he adjusted to a new normal. He now spends his extra time telling his story to others as asked, in order to give hope to those facing hard times. As Todd tells people, “Today, with God’s grace and mercy I have been selected from among 700 others to be employed by USAA, a Fortune 200 company and one of the country’s most military friendly employers (G.I. Jobs) to assist other wounded warriors find employment.”

WINNER’S CLUBS: Heading into Sunday’s final round of the WGC Bridgestone Invitational, Hideki Matsuyama trailed Zach Johnson and Thomas Pieters, co-third round leaders by two shots. He produced a remarkable final round score of 61, to tie the course record also held by Jose Maria Olazabal, Tiger Woods and Sergio Garcia. He won by five shots! Matsuyama and Dustin Johnson have combined to win the last five World Golf Championships. Here is what Hideki Matsuyama had in the bag to win the 2017 WGC Bridgestone Invitational:

Driver: Callaway Great Big Bertha (9 degrees)
Fairway Woods:  TaylorMade M2 2017 (15 degrees)
Hybrid: Honma TW727 UT (19 degrees)
Irons: Srixon Z945 (4-PW)
Wedges: Cleveland 588 RTX 2.0 Precision Forged (52, 56 and 60 degrees)
Putter: TaylorMade TP Collection Mullen prototype
Ball: Srixon Z-Star XV

Hideki Matsuyama’s– Numbers for the week:
Eagles: 1
Birdies: 23
Pars: 39
Bogeys: 9
Double Bogeys: 0
Cumulative Score: 264

WEB GEMS:

THE FIRST! South Korea’s IK Kim held off a challenge from Jodi Ewart Shadoff of England to claim an overdue first major title in the Women’s British Open. READ MORE>>>

YOUTH TO BE SERVED: Juli Inkster added a pair of rookies to her Solheim Cup team for matches that will see plenty of new faces. Inkster, the captain for the second straight time, added 18-year-old Angel Yin and Austin Ernst to her 10 automatic qualifiers. She passed over the experience in Paula Creamer and six-time Solheim Cup veteran Angela Stanford. Creamer, a captain's pick in 2015, will miss her first Solheim Cup since she turned pro. READ MORE>>>

ANSWERS: “We did a show on the 59 where Annika Sorenstam talked about it. I'll tell you what, talk to her for 20 minutes, and you figure out why she won 100 golf tournaments. It's not hard to figure out. She talked about the zone a little bit, how it was 100 percent being in the present. Meaning that the outcome is irrelevant. I had a putt on 18, a 15-footer, the putt goes in the hole, that's a future event that you're not concerned with. What you're concerned about is reading it, getting comfortable, and hitting it soft. If it goes in, it goes in. That's a future problem. So when you say staying in the present, the present, now. Not one shot in front of that. That's really what I did a good job of especially down the stretch, when it started getting -- I think I finished birdie, birdie, birdie, eagle. More crazy stuff happened the last four holes but I was able to just accept where I was and hit the next shot and not concerned -- I think that's really what the zone is.” ---Paul Goydos on the Champions Tour after shooting 60 in the second round (10 shots better than his first round) of the 3M Championship and whether he was in the zone.

You have to go back to 2013 to find the last American player to win the PGA Championship before Jimmy Walker was victorious in 2016. Jason Dufner won at Oak Hills in Rochester NY. He redeemed himself after losing in a playoff to Keegan Bradley in 2011.

THE INFORMATION CONTAINED IS BELIEVED TO BE RELIABLE, BUT IT IS NOT GUARANTEED. THE OPINION EXPRESSED IS THAT OF TERRY MCANDREW AND SHOULD NOT BE CONSIDERED A SOLICITATION TO BUY OR SELL SECURITIES IN ANY OF THE COMPANIES DISCUSSED WITHIN THIS NEWSLETTER. CONTENTS OF THIS NEWSLETTER MAY NOT BE REPRINTED OR REBROADCAST WITHOUT THE EXPRESSED WRITTEN CONSENT OF TMAC GOLF