Fortune Brands Inc., which operates the Titleist, Footjoy, Pinnacle, and Cobra brands under its Acushnet Golf business, said that golf clubs, which had a strong first quarter, declined against a strong double-digit increase in the year-ago quarter. Total golf sales were down 4.0% to $425.5 million in the second quarter, compared to $443.2 million in Q2 last year. Revenues were reportedly impacted by the earlier timing of golf shipments that benefited first quarter sales. The company said that first half golf sales were up 3.0% on a currency-neutral basis.
Operating income for the golf business was down 11.3% to $82.1 million, compared to $92.6 million in the year-ago period. On a comp basis, or excluding FX rates and stock option expenses, operating income was off in the low-single-digits for the H1 period. The shortfall for the quarter was said to be a result of higher commodity costs as well as lower sales of golf clubs.
The company said that, in addition to the earlier delivery of clubs this year, the Cobra Inertia series irons and Titleist fairway metals are in their second selling season and that also impacted sales. They also pointed to the promotional nature of the market right now that sees some competitors giving a free hybrid, wedge, or freeway wood with the purchase of a driver. Sales were said to be higher in all other product categories.
FO said that Titleist has gained shares in irons, wedges, and putters and Cobra’s share was up in metals. Sales of Titleist and Pinnacle brand golf balls were reportedly up in high-single-digits in the quarter and the combined unit share was apparently up year-to-date. Sales for the FootJoy brands were said to be “up solidly” on higher shipments of shoes, gloves, and outerwear.
For the year, the company expects that operating income before charges in golf will likely be “flat to down slightly,” but up when excluding stock option expense.
