Callaway Golf Company said third quarter sales are expected to decline 11% to $191 million from $213 million a year ago. On a currency-neutral basis, estimated net sales would have been $194 million, a decrease of 9% compared to the third quarter of 2008.
The company expects to report a loss of 25 cents per share versus a loss of 25 cents a year ago.
Gross profit is estimated to be $60 million, or 31% of net sales, as its heavy promotional period comes to an end, compared to gross profit of $80 million or 38% of net sales in the third quarter of 2008.
Operating expenses for the quarter are estimated to be $85 million, a 9% improvement compared to $93 million in the third quarter of 2008.
The loss per share for the third quarter of 2009 was adversely affected by approximately 4 cents per share related to the company’s preferred stock and by 1 penny per share associated with the company’s gross margin improvement initiatives. The loss per share for the third quarter of 2008 includes after-tax charges of 4 cents per share for the gross margin initiatives.
CEO George Fellows said in a statement that Callaway has identified several indicators suggesting the beginning of a recovery, noting that the company was able to increase market share and achieve select margin initiatives, “ partially offsetting the effects of a shift to lower price points by consumers, an increased promotional environment, as well as the negative impact of a stronger dollar.”
Fellows added that spending is down 9% for the year to date while supply chain improvements have helped mitigate the impact of a drop in sales. Inventory levels at the end of the quarter were 21.2%, in line with the company’s original target.
