The chronicles of golf’s lack of growth have been plentiful. Its been said more than once, you can’t believe everything you see, hear or read (other than from the Daily Pulse!). TaylorMade adidas Golf’s sales continues to steamroll in 2012. The company reported second quarter sales of 401 million Euros, a jump of nearly 39% from last year when sales were 288 million. The Euro has been under pressure in recent weeks and months due to the economic pressure felt in the European Union. Currency fluctuations can exaggerate financial results in either direction. On a currency neutral basis, sales still grew by a healthy 25%.
Through six months, company sales are 788 million Euros, up 38% (thanks in part to foreign currency translation) from 2011, when it reported 570 million in revenues. In terms of first-half 2012 sales, TMaG said it experienced currency-neutral, year-over-year growth in metalwoods (+25%), irons (+37%), putters (+29%), balls (+16%), footwear (+29%), apparel (+9%) and bags (+110%).
So where is the “growth” coming from?
Participation rates are somewhat up in the air for a variety of reasons but no one is claiming more people are coming into the game. The amount of golf being played in the U.S., still the largest market for recreational players, is up 12.2% year-to-date through June, according to Golf Datatech research. Its fair to say that since individuals are playing more domestically, it bodes well for equipment sales in general. TaylorMade’s equipment prices haven’t increased significantly from a year ago. However, its a pretty safe conclusion to imply that TaylorMade’s success has come from an unlikely and unwilling source. Its foray into white metal woods last year has been wildly successful from an adoption rate by avid golfers. Back in February, hardly a big month for equipment sales throughout the country, TaylorMade reported its metalwoods set a new industry record for U.S. monthly market dollar share at 52%. While the overall market hasn’t grown significantly in recent months, at least not by more than 25%, some of TaylorMade’s funding has come at a direct expense of its competitors as its stolen some market share to help support its impressive numbers. 788 million Euros is approximately $1 billion in US dollars based on a Euro running slight above 20% of an American buck. Not to single out any particular company, but I will anyway since there are few public golf companies anymore, Callaway is forecasting its 2012 revenues will range from $835 to $865 million compared to $887 million in 2011. In 2010 Callaway’s annual sales were $968 million compared to 2009 when it was $951 million. Callaway’s forecast is still certainly respectable and more than a few of its rivals wouldn’t mind trading places with it in terms of annual sales. However, its arch rival TaylorMade has already surpassed in six months, what Callaway believes it can achieve in a year. Once upon a time, not that long ago, the proverbial shoe was on the other foot as Callaway dwarfed TaylorMade in terms of annual sales. In December 2010, Fortune Brands announced the sale of the Acushnet Company (Titleist and FootJoy) under a plan to maximize shareholder value. The #1 ball and #1 shoe and glove in golf had annual sales of $1.2 billion, at the time, to offer further context into TaylorMade’s six month accomplishments.
While the top line revenue numbers have been surging in recent years, its unknown to what extent TaylorMade is spinning back a profit to its German parent adidas, which prefers not to divulge this specific information. While it may sound nitpicky to point out, its worth noting since the “story” could only be better if the bottom line grew at a similar or even accelerated rate compared to the top line.
Meanwhile, in the second quarter, TaylorMade closed on its acquisition of Adams Golf, which will offer further lift to its sales picture going forward with the inclusion of its revenues. However, today’s success quickly transitions to tomorrow’s gold standard to be judged by. TaylorMade has been successful at maintaining its momentum from 2011 into 2012. But next year may be harder to raise eyebrows as it has been in the past. Then again that was likely said by more than few last year heading into this year!