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Home Callaway Golf has mixed results

Callaway Golf (ELY: NYSE) reported slightly higher second quarter sales of $281 million compared to a year ago when it came in at $274 million. It picked up $7 million in sales volume, another $12 (versus q2 2011) in operating income and said it had $10 million in earnings for the reporting period. A year ago it logged a $10 million loss. Looking a little deeper at second quarter sales, metal woods, which the company first made its name and reputation on, were 

down 10% at $58.6 million. Iron sales were also off 5% from a year ago coming in at $57.8 million. Putters came in higher, up 63% from last year, at $38.9 million. Golf balls sales spun back 9% to $49.8 million. The accessories and other category grew 10% from a year ago to reach $76 million. Sales in the largest market for golf, the Unites States, were up 3% in the second quarter from a year ago, while Europe came in 1% higher. Japan delivered a 29% pop, as sales for the region were $37 million. The Rest of Asia however wasn’t as exciting coming in 4% behind a year ago.

At the halfway point of the calendar year, Callaway’s sales stand at $566 million versus $559 million in 2011. It has earnings per share of $0.41 through six-months, compared to a loss of $0.80 in 2011. All in all, not terrible and arguably respectable given the economic challenges many industries are facing in 2012. However, the second part of the year is expected to present some challenges for the business, which CEO, Chip Brewer outlined.

"We are pleased that sales and earnings increased during the first half of 2012 compared to the same period in 2011," stated Brewer. "The pace of improvement, however, is slower than anticipated and our market shares have not met our expectations, resulting in higher than expected retail inventory levels at this time of year. As a result, we have lowered our sales expectations for the second half of the year to allow us to work through any excess inventory at retail and prepare our business for improved results in 2013."

During the company’s conference call with Wall Street, Brewer alluded that Callaway’s irons are ahead of last year’s retail levels, while other product categories are essentially where they were 12 months ago. Brewer’s personality is somewhat aggressive, he noted, and therefore wants to address the iron inventory to a point he is more comfortable with, which would indicate some discounting is likely in order.