Callaway on the Mend

After a difficult 18 months, things may at last be looking up for Callaway Golf. The company's worldwide third-quarter results, reflecting cost-cutting measures introduced a year ago when founder and chairman Ely Callaway resumed the chief executive officer's role from Donald Dye just a few months short of his 80th birthday, suggest the recovery is well under way.

Despite a drop in American sales over the quarter of 7 per cent to $103.6 million (£63 million), Callaway reported European sales up 8 per cent to $31 million (£18 million), Japanese revenues up 64 per cent to $20.4 million (£12.3 million), and those from the rest of Asia up 78 per cent to $18.6 million (£11 million) while the remainder of the world remained constant at $9.7 million (£5.8 million).

Callaway's decision to own and operate their own distributorship in Japan, beginning in the year 2000, appears fortuitous given the company's recent resurgence in that region.

Callaway launched their Hawk Eye irons late in the third quarter, too late in the golf season for a strong retailing performance, but still managed sales with the new clubs of $7.1 million (£4.9 million). Callaway also remain on schedule for their golf ball launch at the PGA Merchandise Show in Orlando next February, with shipping to commence shortly thereafter.

However, not every manufacturer is enjoying the same success as Callaway. Adams Golf's third-quarter operating results to the end of September decreased to $9.0 million (£5.4 million) compared to $22.9 million (£13.8 million) during the same period in 1998.

A net loss of $3.8 million (£2.3 million) was recorded whereas last year the same period yielded a profit of $4.3 million (£2.58 million).

For the first nine months of 1999, Adams reported sales of $43.1 million (£25.9 million) compared to $81.3 million (£49 million) for the comparable period in 1998 and have recorded a net loss of $6.2 million (£3.7 million) compared to net income of $16.6 million (£10 million) over the first nine months of last year.

Despite the poor results, chairman Barney Adams said: "We believe we have significantly strengthened our organisation over the past two months through restructuring our sales department. We are also in the process of introducing a major new product line, Tight Lies 2, which began shipping in October. We believe these initiatives make us a stronger company moving into 2000."

Skis Rossignol SA, maker of Cleveland clubs, expect to break even this fiscal year and are predicting a 10 per cetn sales rise in each of the next three years. Sales of Cleveland golf equipment is on course for a 32 per cent increase to $50 million compared with last year's figure of $38.6 million.

*Clubhead forgers Fairway to Heaven have been fined $175,000 (£105,000) for contempt of court. The firm were ordered to stop producing or selling copies of Callaway's Big Bertha X-12 irons and Steelhead metal woods in December 1998. The US District Court in New Jersey also held Fairway to Heaven salesman Joe Opulski in contempt and told him to pay Callaway $100,000 plus costs.