Callaway Golf Company announced that it expects first quarter sales to increase approximately 10% to $330 million to $335 million, with a corresponding estimated increase of approximately 42% in earnings per diluted share that that should range from 46 cents to 48 cents, including long-term incentive compensation expense. These results also include after-tax charges of a penny per share related to gross margin improvement initiatives announced in November.
For the first quarter last year, the company saw net sales of $302 million with diluted earnings per share of 33 cents including after-tax charges of approximately a penny per share for Top-Flite integration.
The company attributed the sales increase to improved driver sales associated with the early launch of the FT-i and FT-5 fusion technology products; increased irons sales associated with the X-20 and X-20 tour models, as well as the new X-forged product line; and increased accessories sales associated with footwear, bags, and gloves.
The company estimates its gross margins as a percentage of net sales to be approximately 48% for the first quarter, up from 43% last year. The increase in gross margins was primarily attributable to increased sales of higher margin products such as fusion drivers, X-series irons, and accessories, as well as manufacturing efficiencies and the successful implementation of gross margin improvement initiatives.
ELY expects operating expenses for the quarter will be approximately $105 million, an increase of approximately $10 million when compared to last year's first quarter, primarily due to an increase in marketing expense associated with the first quarter launches of the company's new products and higher expenses associated with the sales increase.