Topgolf Callaway Brands is conducting a full strategic review of its ownership of the indoor-outdoor driving range/entertainment venues, and may spin off the business due to underwhelming stock and sales performance.
Here’s the latest on your favorite spot to hang and hit golf balls.
Topgolf Callaway Brands’ overall sales increased by 5% in the quarter, likely because new venues opened — four more are under construction. But its, same-venue sales experienced “softer-than-expected traffic”, dipping by 8%. The Q1 report showed same-venue sales down 7%.
Topgolf’s contribution to the company’s total revenue fell 1.9% year over year, as its revenue streams are largely tied to expansion. (Callaway saw sales dip across the board year-to-year, including an 8% decrease in equipment sales, though the company said that was due to changes in the rollout calendar and Asian currencies, per the Sports Business Journal.)
Callaway made its first investment in TopGolf in 2006. By 2020, Callaway owned 18%, according to Front Office Sports. In 2021 — right as venues were re-opening post-COVID — the companies merged, forming TopGolf Callaway Brands, reimagined as a tech-forward “golf equipment, apparel and entertainment” company.
The company launched dozens of Topgolf locations across the United States and beyond.
The post-pandemic bump has, evidently, stalled.
“We believe (Topgolf) will deliver substantial growth and financial returns over time,” president and CEO Chip Brewer announced on the second-quarter earnings call. “We remain convinced Topgolf is a high-quality business with significant future opportunity. At the same time, we have been disappointed in our stock performance for some time, as well as more recent same-venue sales performance.”
Brewer said a review of the Topgolf business would be done “expeditiously” but did not wade into details. He tried to stoke disappointment on the earnings call, arguing that Topgolf’s troubles are “short-term”, possibly connected to “post-COVID normalization.”
“The review includes the assessment of organic strategies to return Topgolf to profitable same-venue sales growth, as well as inorganic alternatives,” Brewer added.
Related NewsArticle continues below
Back in March, the South Korea-based Chosun Daily reported that Callway was talking to LIV Golf‘s backer, the Public Investment Fund (PIF) of Saudi Arabia, about a Topgolf sale. Callaway firmly denied the report.
“While it is our long-standing practice not to respond to market rumors and speculation, in light of today’s unusual market activity, coupled with a recent media report originating in Korea regarding discussions of a potential sale of the company or its golf equipment business, we confirm that we are not aware of any such discussions,” a company spokesman said at the time. “We do not intend to comment further on this topic, and we assume no obligation to make any further announcement or disclosure should circumstances change.”
LIV’s Phil Mickelson seemed to like the idea: “I haven’t heard anything about this but what a great idea and I pray this happens,” Mickelson posted on X in response to the speculation.
Jon Rahm, Rose Zhang, Xander Schauffele, Sam Burns, Akshay Bhatia and Min Woo Lee are among the LPGA, PGA Tour and LIV Golf players signed with Callaway.
