Hoping to rebound from a fiscal 2009 that saw sales fall 15.0% in a bleak golf environment, Callaway Golf Company estimated net sales for the first quarter of fiscal 2010 would reach approximately $303 million-which would represent an increase of 11% compared to net sales of $272 million for the first quarter of 2009. The pervasive discounting that occurred in 2009 has subsided, said George Fellows, president and CEO of Callaway. Retail inventory levels are healthy and we have received positive consumer feedback on our 2010 product line
In a recent conference call with analysts, Fellows noted that 2010 suffered from slimmed-down orders, a stronger US dollar and a highly-promotional retail environment that crippled full-year margins.
ELY management said foreign currency rates had favorably affected Q1 revenues by approximately $15 million. On a currency-neutral basis, sales are estimated to be $288 million, a year-over-year increase of 6%.
poor weather conditions have delayed the opening of the golf season in many of our key markets and tempered our first quarter sales, Fellows continued, (but) we believe golf spending will increase as weather conditions improve and the golf season opens.
The estimated 11% improvement is still slightly below what many analysts predicted.
Among other estimates, gross profit is expected to be $137 million, or 45% of net sales, as compared to a year-ago gross profit of $116 million, or a gross margin of 43%. Earnings per diluted share are estimated to be about 24 cents (on 83.9 million diluted shares outstanding) as compared to EPS of 11 cents (on 63.3 million diluted shares outstanding) last year. Fellows warned that although estimates may spur optimism, the second quarter would be a better indicator of full year results since it represents the peak of the consumer purchase cycle in the golf market.
