Fortune Brands, Inc., the parent company of Acushnet, reported earnings and sales improved significantly for the fourth quarter ended Dec. 31 against a prior-year period that included substantial charges.
Regarding the Acushnet golf business, sales improved 2.9% to $233.5 million in Q4 from $226.9 million in Q4 2009. The business recorded an operating loss of $26.6 million dollars for the quarter, narrowed from a loss of $37.3 million in the prior-year quarter.


For the full year, the Acushnet business posted a 1.9% increase in revenues to $1.24 billion from $1.22 billion in the prior year. 


Operating income for the division surged 255% to $88.7 million in 2010, compared to $25.0 million in 2009.  Excluding misc. one-time charges and gains in both years, operating income rose 33.0% to $80.2 million.
Management said they “significantly outperformed the golf market on growth and returns again in 2010” and “with a lean operational footprint already in place, this business is well positioned for substantial upside in the category of favorable long-term demographics.”


The Titleist and FootJoy brands grew full-year sales at a mid-single-digit rate with gains across all product categories. Management said sales of golf balls “grew solidly” in the quarter and were up low-single-digits for the year in constant currency.


The fourth quarter apparently benefited from a holiday personalization program. The company said it saw strong gains for the year in the corporate custom category. Sales of Titleist clubs grew at a double-digit rate in the quarter and for the full year. The quarter benefited from the launch of the new Titleist 910 drivers, with the VG3 driver in Japan and strong year-end demand for Vokey wedges prior to the new groove restrictions.


For the year, Achushnet boasted “very strong sales” of the new Titleist iron models as well as drivers, Vokey wedges and Scotty Cameron putters. The initial response to the 910 driver was said to be “excellent.”


At Footjoy, the company’s softgoods platform reportedly had an “excellent year,” with strong sales growth in each category in the fourth quarter and for the full year.


Innovations such as the new flagship ICON shoe line and the FootJoy sport line helped drive a high-single-digit growth increase in comparable full-year sales of golf footwear.


Acushnet expects the global golf market to be up at a low-single-digit rate for the current year, but expects to outperform that trend. Operating income before charges associated with the Cobra divestiture is forecast to be up at a double-digit rate.  When factoring in additional investments in Asia and other strategic initiatives, the company is targeting operating income before charges to be flat for the year.
On a conference call with analysts, management confirmed that the company will continue to move forward to “become a focused, high-return spirits business” and is exploring the sale or spinoff of the golf business. The company stated in late 2010 that it would explore a sale or spinoff of its golf business under pressure from activist investor William Ackman.


Morgan Stanley, which the company has hired to manage the process, reportedly sent out marketing materials and non-disclosure agreements to potential suitors that include Nike, Adidas, Callaway,

 

Cleveland/Srixon parent Sumitomo Rubber and Mizuno. “…you will see the things related to that happening in the marketplace probably sooner than later,” said Fortune Chairman and CEO Bruce Carbonari.