Golf Street Journal // Week 19 - 2020

Callaway Golf has issued preliminary Q1 results that said the company expects sales of between $438 million and $448 million – compared to $516 million in Q1 of 2019. Callaway’s official earnings report is expected later this month, but this is the first glimpse we’ve received of any major golf equipment company’s numbers during the Covid-19 pandemic. The Acushnet Company, parent of Titleist and FootJoy, will report its Q1 numbers on May 7.

Callaway’s first quarter sales have traditionally been the company’s strongest, so given the Q1 2020 decline from Q1 2019, that doesn’t bode well for Q2 and beyond. Remember that most of those Q1 2020 sales occurred in January – before the pandemic panic – so there really is no way (publicly) of knowing what kind of sales decline Callaway experienced in February and March 2020.

Callaway President Chip Brewer, however, said that in March, global regulatory responses implementing social distancing and shelter-in-place orders “significantly slowed retail sales’’ and created various business operations challenges worldwide, which “significantly affected,’’ his company’s Q1 financial results after a strong start to the quarter.

Also, Callaway Golf appears to be trying to refinance some debt - most likely from the purchase of apparel company Jack Wolfskin in 2019. The company announced a new $200M convertible senior note offering due in 2026. Callaway said it intends to use a portion of the proceeds to pay the cost of certain capped call transaction, while the remainder is intended for working capital and general corporate purposes.

The National Foundation reports that nearly 50 percent of courses in the U.S. are open during these days of the Covid-19 pandemic. That number is certain to increase as more states, including Florida, begin re-opening this week, which is good news. The bad news is that it’s going to be a slow recovery for golf - just opening up golf courses won't be enough. Courses and clubs will have to put together entire new business plans based on the fact that the golfing public - even if Covid-19 went away tomorrow - will take makes to recover economically.

Under the "new'' normal, it will be more important than ever to keep players who already are in the game. For years golf has sold itself on what it wants people to believe it is rather than what it really is in terms of overall value. The "new'' normal will force a lot of courses and clubs basically to re-invent themselves. Those that don't will be left behind.

No surprise that Golf Datatech reported  March 2020 rounds in the U.S. were down 8.5 percent compared to March 2019. That number would have been worse had not Datatech tracking showed double digit increases in Northern regions of the country, as well as New England.

Datatech said March 2020 represents an “inflection point’’ as the golf industry dealt with coronavirus closures in what would usually be seasonally open markets.  Due to governmental actions, many states closed courses to play.  However, in several cases, according to Datatech, these closures did not hit until late in the month.  

Year over year through March 2020, Datatech said rounds were up 3.8 percent, but again, that number is skewed by some unusually high number of rounds in the Northern sections of the U.S.
Regardless, all of those numbers likely will be trashed when Datatech reports its April 2020 numbers.

The Breakers Palm Beach, one of the country’s more luxurious and historic resorts, plans to re-open May 22 at 10 a.m. The resort’s two golf courses – the Ocean Course and Breakers West – each re-opened May 1. The Ocean Course, designed by Alexander Findlay in 1896, is Florida’s oldest existing golf course.

In a move that likely is to be followed by many golf companies – large and small – putter company Sacks Parente Golf Company says it “significantly’’ lowering the prices of each of its putter for the remainder of 2020.
The Sacks Parente line of putters includes the Series 18 Cavity Back Flange Blade, the Series 66 Cavity Back Blade, the Series 39 True Blade and Series 54 Mid-Size (my favorite) and Large Mallet putters.
As part of the new pricing, the Series 18 and Series 66 putters are now discounted from $600 to $479 and the Series 39 and Series 54 putters are now discounted from $600 to $399.

As part of what the U.S. Golf Association calls its “mission to champion and advance the game of golf and to actively engage in the sustainability effort across the sports landscape,’’ golf’s self-appointed ruling body has joined more than 100 organizations in becoming a signatory of the United Nations Sports for Climate Action Initiative.

Sports for Climate Action was created in 2018 as a platform for sports organizations to support climate action in a highly collaborative forum. Signatories of the initiative commit to five key principles: undertaking systematic efforts to promote greater environmental responsibility; reducing overall climate impact; educating for climate action; promoting sustainable and responsible consumption; and advocating for climate action through communication.

Current signatories to the initiative include the International Golf Federation, NBA, FIFA, Union of European Football Associations (UEFA) and the New York Yankees.

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