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Callaway Golf numbers tell a different story than Fellows
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I've given up trying to figure out who Callaway Golf Company (NYSE: ELY) President George Fellows is trying to fool. For example, in a conference call with Wall Street analysts yesterday, Fellows said that signs of the golf equipment industry's spiral have started to appear and that some of that "improvement'' is "undoubtedly a function of the aggressive promotional'' of the golf industry.
"We (Callaway) being front and center in that effort,'' Fellows said.
Fellows then went on to tell the analysts that the trade has been been strongly receptive of Callaway's 2010 product line (the same thing he said about the 2009 line a year ago) and that pre-books are running ahead of expectations.
The pre-book is about the only thing one can take out of Fellows' statements as positive - and even that can be called into question because we don't know the specifics of Callaway's sales expectations for 2010.
Let's take a look at the numbers we do see: Fellows says Callaway was "front and center'' in the industry's aggressive promotional activities. It wasn't that long ago that Fellows, in a conference call with analysts, chastised his competitors for their aggressive promotions.
But I digress. Fellows didn't define "front and center,'' but Callaway certainly has been a major player in sales promotions this year. For example, on its web site the company is offering a $100 rebate on its X-22 and X-22 Tour irons.
The Q3 and nine-month numbers show the promotions haven't worked out all that well. The Q3 numbers show that Callaway's sales dropped from $213 million to $191 million and that the company lost a whopping $16 million in the quarter. For the first nine months of '09, Callaway's sales dropped to $765,000 from $945,000 and it lost nearly $2.8 million the first nine months of this year.
Callaway's metal woods sales Q3 were up four percent compared to the same period a year ago - likely because of the aggressive promotions Fellows talked about, but Q3 sales were down double digits in irons, putters and balls.
For the nine months, Callaway's metal wood sales were down 19 percent compared to the same period in '09 and irons, putters and balls also were down double digits.
And by the way, Callaway's stock finished today down 56 cents to $6.84 cents per share.
Signs of improvement? Don't be fooled.
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