Callaway Golf Co. saw sales for the third quarter rise by 12 percent to $475.5 million, thanks to the rising popularity of golf after lockdowns ended, as the sport can be practiced while respecting social distancing guidelines. The golf equipment segment’s sales soared by 27 percent from the year-ago quarter to $267.3 million, but apparel, gear and other sales fell by 3 percent to $208.3 million. In addition, currency fluctuations had a positive impact of $8 million on turnover.
The gross margin decreased by 2.7 percentage points to 42.2 percent, due to the company’s aggressive inventory reduction initiatives during the pandemic. This was partially offset by an increase in the company’s e-commerce sales and a slight increase in golf equipment gross margins.
The U.S. recorded a 33 percent rise in revenues to $214.6 million during the quarter. In Europe, sales inched up by 1 percent to $134.7 million, weighed down by Jack Wolfskin, the German outdoor brand that Callaway took over at the beginning of 2019 for around €418 million, despite gains in golf. In Japan, revenues dropped by 12 percent to $56.5 million, but sales in the rest of world progressed by 4 percent to $69.7 million.
Golf club sales grew by 25 percent to $209.4 million, with broad-based gains across categories, driven by higher demand from existing customers and new golfers. Ball sales jumped by 36 percent to $57.9 million, while apparel sales dipped by 10 percent to $125.6 million, hampered by a 16 percent drop in Jack Wolfskin despite a good performance from TravisMathew and the Callaway brand. E-commerce sales were robust for the apparel brands, growing by 108 percent in the quarter. Gear and other sales rose by 9 percent to $82.7 million.
Adjusted Ebitdas, which excludes interest, taxes, depreciation and amortization as well as stock compensation, declined to $175 million, against $216 million last year. Net income rose by 69 percent to $52.4 million.
The management did not release any guidance for the full year, but said the fourth quarter is off to a good start. It is continuing to make progress on the consolidation into the new Superhub distribution center in Texas. It highlighted the potential of the merger with Topgolf, which it announced at the end of October. Topgolf operates large, technologically enhanced driving ranges with restaurants and bars. Callaway anticipates many synergies and strong growth prospects.