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Home Callaway metal woods drive third qaurter sales

Once upon a time when Callaway Golf reported its financial results many would stop what they were doing and pay attention. For many years how Callaway went, so went the industry as the company was once the market leader in terms of market share in metal woods and irons. Wall Street still pays attention to the company but it doesn’t have the same cache it once held in the world of bulls and bears. In recent years the company has been in a turn around situation as its changed management in an effort to regain some of its past success. Meanwhile, the general economy hasn’t been the friendliest to help any particular cause. The third quarter in golf is usually the tipping point, when equipment companies in general go from being profitable to losing money. The recreational playing season has set as most mature golf markets await old man winter to arrive. New product introductions begin to litter the landscape but won’t be truly felt until the following spring outside of the Sunbelt regions. In the so-called good old days, new products were delivered in the first quarter, sold and re-ordered in the second and if you had something really good it still had legs in the third. These days, the third quarter is often in preparation of the next wave to hit retail stores before the end of the year.

Callaway reported third quarter sales of $178 million, a jump of $30 million from a year ago. According to the company, changes in foreign currency rates negatively affected third quarter sales by approximately $14 million. The biggest reason for the sales improvement in the quarter was its metal woods business was up 81%! In 2013, third quarter sales of metal woods were $56.525 million, its largest in five years for the reporting period, compared to $25.378 million a year ago. A partial reason for the increase can be attributed to the fact it was the first full quarter Callaway realized sales of its Optiforce driver, which debuted at retail on July 12th. “X HOT is the best selling driver in the UK year to date, according to Sports Marketing Survey,” Harry Arnett, SVP of Marketing stated on his Twitter feed Thursday ahead of the company’s earnings announcement.

Iron sales ($39.472 million) in the reporting period added an extra $8.443 million in revenues compared to a year ago. The putter business ($20.388 million in the third quarter) was also higher by $4.654 million, due to a product launch in Japan, versus 2012. Golf ball sales trailed 2012 by a $1 million and the infamous accessories business shed $7.151 million in sales. Unfortunately for Callaway Golf or its followers, the good news didn’t extend to its bottom line, which saw a net loss of $21.2 million for the third quarter of 2013.

Year-to-date through the end of September, Callaway sales stand at $715.6 million with the help of its third quarter versus $714.2 million in 2012. Metal woods sales are up $47.5 million this year through nine months versus last year’s pace. However, the accessories category, which was an area of emphasis under the George Fellows administration, is down $41.5 million from a year ago, nearly off setting the metal woods improvements. In 2013, Callaway reported net income of $30.578 million over nine months of operation compared to a net loss of $52.197 million a year ago.