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Home Daily Golf Briefs Daily Pulse for October 25, 2018

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Web Street Golf Daily Pulse
VOLUME 8, NUMBER 209                                                       
Thursday, October 25, 2018

ANY IDEA WHO SAID THIS? “It is important to have a good start, especially for me because I normally take quite a long break from the PGA TOUR. When I don't have a good start, I fall a long way behind in the FedExCup and that makes for a lot of work throughout the year. Last week and this week is very important for me so I can go home and take my break and come back in February not too far behind hopefully”

BRAIN TEASER: This player fell out of the top 10 in the world this week after a four-year run. Who is he?

BUSINESS REMAINS GOOD! Callaway Golf reported its third quarter financial results and business remains strong for the Chevron. The company said third quarter sales were $263 million, an increase of $19 million from a year ago, which delivered $11 million to the bottom line. Through nine-months of 2018, Callaway’s sales stand at $1.062 billion, an increase of $205 million from a year ago. It has earned $133 million from 2018 sales compared to $60 million on sales of $857 million through the same period in 2017.

2018 third quarter sales were comprised of metal woods ($52.4 million), Irons ($65 million), Putters ($24.9 million), Golf Balls ($44.7 million) and Gear/Accessories ($75.6 million).  Every category registered an improvement other than its metal woods business. It was down 20% or $13.4 million from a year ago.

From a geographical basis, Callaway’s third quarter sales were up 14.7% in the United States ($142 million) versus a year ago. Europe ($33.1 million) was modestly higher by 1.9%, Japan ($54.4 million) by 2.8%, the Rest of Asia ($20.9 million) nudged up 2.4%. Other foreign countries ($12.2 million) were off 12% for the quarter.

It’s safe to conclude that Callaway continues to make inroad in terms of its market share against the competition. It boasts being the #1 dollar market share in Total Clubs, Total Woods, Total Irons and Total Putters and #2 golf ball brand with 16.5% market share in the US.

In Japan, its hard goods business, #2 for that geography, is at 18%, year-to-date, down 230 bps year-over-year. In Europe where it remains #1 in Total Hard Goods with 23.6% dollar share (through August), but it is down year-over-year.

Looking at the year, through nine-months, Callaway’s wood business has grown $12.5 million from 2017. It has recorded $275.2 million in sales already this year and it ranks in terms of pure revenue as its largest reporting category. Irons are a close second with 2018 sales of $271.4 million, an increase of $69.3 million or 34.3% from a year ago. Thanks to its acquisitions of OGIO and TravisMathew in 2017, Gear/Accessories has become another strong foothold for the company. It has 9-month sales of $254 million, an increase of $79 million or 42.7%, from year ago. Golf ball sales are $165.5 million through 9-months, an increase of $29.4 million. Putters ($86.1 million) have increased by $14.9 million or 21%.

Callaway’s 2018 sales increase of $205 million has largely been provided by irons (+$69.2 million) and gear/accessories (+$79 million). When we think of Callaway, it’s often as a metal woods business, which it commands a large based in. Yet, growing that base can be difficult. However, Callaway has been successful at doing so in 2018. One note of caution as it appears the category is in need of an injection of new products, which are more than likely just around the corner. Consider wood sales dropped by $13.4 million in the third quarter, leaving the company reporting a revised incremental increase year-to-date now of $12.5 million! Had it been able to hold its own in the third quarter, it metal wood increase over 2017 would have been $25.9 million!

Despite this nitpicking, this has been a robust year for Callaway and its products. While it won’t sit well with the competition, its clear the brand continues to enjoy momentum with retailers and consumers worldwide. Some pockets of the globe more so than others.

WEB GEMS:

OPPORTUNITY IS KNOCKING: Justin Rose will look to achieve something only Tiger Woods has managed before in the WGC-HSBC Champions in Shanghai. READ MORE>>>

THE DIFFERENCE A WEEK CAN MAKE: His path to the winner’s circle was anything but. He’d played just four seasons on TOUR before last year, finishing in the top 10 just four times. He’d considered quitting the game, especially when his trademark accuracy left him in 2012 and 2013. “I really didn't know what I was doing, I mean, golf-wise,” he said. “I was hitting it so poorly. For me to start driving it off line, I mean, I can't compete if I drive it off line.” READ MORE>>>

ANSWERS: “It is important to have a good start, especially for me because I normally take quite a long break from the PGA TOUR. When I don't have a good start, I fall a long way behind in the FedExCup and that makes for a lot of work throughout the year. Last week and this week is very important for me so I can go home and take my break and come back in February not too far behind hopefully”--Adam Scott.

Jordan Spieth fell out of the top 10 in the world this week after a four-year run inside the top group. Spieth is not in the field this week but will have a chance to improve that ranking when he returns next week in Vegas.

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