Topgolf Callaway Brands Corp. MODG signed a multiyear agreement with Golf Saudi Entertainment LLC (Golf Saudi) to expand its brands in Saudi Arabia. This deal includes popular brands like Topgolf, Callaway, TravisMathew, Odyssey and Ogio, further supporting the company’s global growth.
MODG is expanding into the Middle East by partnering with Golf Saudi to establish its presence in Saudi Arabia. This collaboration will introduce innovative offerings and enhance the growth of golf in the region, positioning Saudi Arabia as a significant player in the global golf landscape.
Per the deal, Topgolf will open three venues by 2028, with the option to add two more, all of which will be owned and operated by Golf Saudi. Callaway Golf, Odyssey, TravisMathew and Ogio will become the official equipment and apparel brands for the Saudi national golf teams, elite players and professionals at Golf Saudi facilities. Golf Saudi will also serve as the exclusive distributor of Callaway Golf, Odyssey and Ogio products within the region.
The company is focusing on expansion efforts to enhance its market presence. It is assessing both organic strategies, such as improving same-venue sales growth and inorganic options, including a potential spin-off of Topgolf. MODG is registering strong performance in two of its three key areas. The company excels in venue margins and the development of new venues.
During second-quarter 2024 earnings call, it announced plans to open seven new venues this year. It added one venue in Bryan, TX, during the first quarter and successfully opened another in Durham, Montebello, in the second quarter. The remaining four venues are currently under construction and are on schedule. The new venues are performing well and meeting high financial targets.
MODG continues to show its ability to improve operating efficiency in its venues. It consistently delivers strong performance in newly-opened locations, achieving attractive financial returns. The company is also growing its digital capabilities and enhancing the overall consumer experience.
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Shares of Topgolf Callaway have declined 24.2% in the year-to-date period against the Zacks Leisure and Recreation Products industry’s 4.6% growth. Although the company has underperformed the industry in the said period, it is likely to benefit from increased digital sales penetration and strong market share performance at Travis Mathew and Callaway Golf Equipment. Also, the emphasis on expansion through organic and inorganic options bodes well for MODG’s growth prospects.
Topgolf currently carries a Zacks Rank #3 (Hold).
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