Callaway Golf Co. on Thursday raised its 2003 earnings estimate but lowered its sales forecast as the maker of high-end golf clubs reported an 8% drop in second-quarter net income.
Citing wet spring weather, especially on the East Coast, and cautious consumer spending, the Carlsbad, Calif.-based company said it earned $34.1 million, or 52 cents a share, for the quarter ended June 30, down from $37.1 million, or 55 cents, a year ago. The results beat a consensus of analysts' estimates by 14 cents, according to Thomson First Call.
Although Callaway saw continuing demand for its signature Big Bertha drivers and Odyssey putters, a drop in sales of golf balls and woods drove second-quarter sales down 4% to $242.1 million. International sales fell 9% as the Japanese market continued its slide. Domestic sales were flat as some golfers put off new purchases because of unusually wet spring weather in parts of the country, the company said.
The $6-billion golf retail industry has scored a bogey of late, with U.S. sales of club sets dropping 20% last year. Rounds of golf played across the nation this year are down 2.7%, according to Callaway, even as superstar players such as Tiger Woods and Annika Sorenstam continue to captivate large audiences.
Callaway raised its guidance for full-year earnings to 95 cents a share but lowered its 2003 sales forecast to $780 million. In April, the company had forecast a profit of 88 cents and revenue of $792 million for the year.
Chief Executive Ron Drapeau said that achieving the new targets would "not be easy" and warned of a possible loss in the fourth quarter, though he declined to offer any quarterly guidance.
The company's forecast for the rest of the year did not take into account last month's proposal to buy golf club and ball maker Top-Flite Golf Co. out of bankruptcy for about $125 million. Callaway said it expected to close the deal as early as September if no competing bidders emerged.
Shares of Callaway fell 4 cents to $14.11 on the New York Stock Exchange before the company announced its results.