The Acushnet Co, the division of Fortune Brands that includes the Cobra, Titleist and FootJoy golf brands, saw third quarter revenue decline 9.5% to $278.6 million from $307.9 million in the year-ago period. Sales in constant currencies were down 7% for the period. Operating income fell 59.6% to $9.7 million from $24.0 million a year ago. Before charges, operating income was $10.1 million, down 57.9% from $24.0 million a year ago.
Revenues in the U.S. were down at a double-digit rate, but sales in constant currency were up 10% outside the U.S. and that includes double-digit gains in Europe, Korea and Australia.
Management attributes the U.S. decline to the economy, which has been particularly tough on discretionary activities such as golf. They said corporate spending on golf, which includes outings and related product purchases has been reduced, which has had an adverse impact on their “market leading” corporate custom golf ball business. Still, the company sees more stability in European markets and sustained growth opportunities in Asia.
Sales of golf balls were down in double digits, mostly due to “the impact of lower customer orders and soft sales below the Pro V level.” Management suggested that the Pro V1 family of golf balls has gained two share points year-to-date through August at U.S. on- and off-course golf shops.
Sales of golf clubs were off modestly in constant currency. Titleist and Cobra both grew club sales in international markets, partly offsetting softer sales in the U.S. Sales of Titleist irons were off in advance of the introduction of the next generation AP1 and AP2 irons, plus the new forged CB and MB irons. Sales of Vokey Design wedges and the Titleist 909 Series of drivers, fairways and hybrids continued to grow. Sales of Cobra clubs were essentially flat for the quarter in constant currency.
Sales of FootJoy golf shoes increased slightly in constant currency, driven by growth internationally and the success of several new styles, including the initial shipments of the new FootJoy Icon.
Sales of gloves and accessories were off slightly in constant currencies.
All together, Acushnet estimates that 2009 worldwide golf industry revenues are down in the range of 12% to 15% year-over-year.
Management is forecasting a fourth quarter loss, its smallest period in revenues, and the loss is expected to be “larger than last year” due to lower sales, which will be comping against last year's launch of the Titleist 909 Series. While FX rates will moderate in the fourth quarter, the company sees their full-year golf results reflecting an unfavorable impact from FX of approximately $20 million to $25 million.
