Ashworth is capitalizing on its license for the Callaway brand, but price pressure from competitors and a soft retail environment has caused the company to cut prices on its basic product in the 8% to 10% range in the second quarter to fuel at-once business, and will lower prices for the Fall/Holiday season.
Sales of Callaway brand apparel is expected to hit $27 – $30 million for the fiscal year, about what Nordstrom was selling at retail after seven years. The company saw $10.2 million in Callaway sales for the quarter, while Ashworth brand sales contributed 29% of the total sales gain, increasing 6.6% to $42.4 million.
The Golf Green Grass business grew 17.5% to $32.4 million in fiscal Q2, and Retail Sales, which includes Department Stores, increased 46.8% to $4.0 million. Corporate sales gained 4.0%. The Retail channel is now 23% of total sales versus 18% in the year-ago period.
The company was quite excited about its growth in Department Stores, pointing out that they now have 400 doors with Ashworth brand apparel there versus 186 doors a year ago. Callaway is in 171 doors for Fall/Holiday versus 78 doors last year. Ashworth will add Womens product at key retailers such as Nordstrom and Marshall Fields for Fall/Holiday.
Ashworth domestic backlog was primarily affected by the soft Golf channel, which was down 4.8% at quarter-end. The Retail channel was up 36.6%. Callaway brand backlog in the Golf channel was down 4.7%, while the Retail channel was up 15.5%. The company sees Callaway growing 60% to 78% for fiscal 2003.
ASHW expects consolidated net revenues for fiscal 2003 of $147.6 million to $151.7 million and earnings of $0.54 to $0.59 per diluted share, an increase in the range of 184% to 211% compared to fiscal 2002.
