Ashworth, Inc. is looking to the retail and department store channel to grow its business going forward as the core green grass business continues to suffer from the weak economy and this year’s weather woes.

In reporting numbers for its fiscal third quarter ended July 31, 2003, Ashworth showed a 68.2% increase in the retail/dept. store channel to $3.0 million. Corporate accounts inched up 1.2% to $6.4 million while the Core Golf channel dipped 3.8% to $20.8 million format he year-ago quarter.

The company’s owned retail grew 1.9% to $1.5 million despite closing one store, netting a 18% comp store gain for the period.

The International business grew 26.0% to $6.3 million, with the U.K. growing 23.8% to $4.1 million and Canada jumping 53.8% to $1.5 million.

While Callaway apparel grew slower than its Ashworth counterpart in the quarter, the company was quick to point out that the brand was up against large initial booking orders a year ago.

Management pointed out that the Callaway product had a 17% increase in the number of accounts for fiscal Q4. The line was off in the Core Golf channel, but performed “better than expected” in the other channels. Callaway has done “incredibly well” in Europe.

The company sees “minimal cannibalization” of the Ashworth brand by Callaway. Ashworth is performing very well according the company’s numbers, which indicated a 15% comp store retail sales increase, up 53% overall, in Spring 2003.

The company will be getting out of the full-price retail business and will close its last store October 1st.
Instead, they will ramp up the outlet stores to grow to 20 stores by the end of 2006 from the current seven to help meet the goal to sell the majority of excess inventory through its own stores in the same timeframe.

Gross margin improvement was due mainly to improved sourcing. The inventory growth is due mainly to Callaway as the company ramps up to service the basic fill-in business. Ashworth brand inventories were actually down 8.5% versus the year-ago quarter-end.

The company is seeing flat to mid-single digit growth in at-once business.

Looking ahead, full year earnings are expected to grow in excess of 40% to the 54 cents to 57 cents range on sales growth of 14% – 16% to $147.6 million to $149.6 million.


>>> We wonder if there’s any correlation to the need for more outlet stores to liquidate goods and the focus on the department store business…