Following up on a disappointing fourth quarter that saw earnings dampened by investments made in the emerging markets in China, Indonesia and India, management atCallaway, Inc. met with analysts and investors at the Bank of America/Merill Lynch Conference in New York City last week to discuss the growth prospects of those very markets.
“We believe deeper penetration in a lot of these expanding markets [will be] very important to the future growth of the company,” said company CEO George Fellows. “Not only is international growing faster than the U.S. by a fairly substantial margin, but the margins in the international environment are much higher than (the U.S.).”
Regarding the Southeast Asia market, Fellows added that strength from Korea has resulted in the region growing as fast as the company’s China operations. Fellows also pointed to opportunities with Latin America in relation to the 2016 Olympic in Brazil, which will mark the first time since 1904 that golf will be an Olympic sport. “ we're already seeing substantial ramp-up of activity in places like China, India, and Eastern Europe,” Fellows added, “reflecting the fact that some of these governments and countries are interested in being competitive in golf when it finally gets back into the Olympics in '16.”
Regarding other growth opportunities, Fellows said the softgoods and accessories businesses have been strong, while the company’s new partnership with Perry Ellis has paid off. Fellows said there are also expansion opportunities on the licensing side.
Regarding outlook, Fellows said Callaway was going to be conservative with expectations given a weak environment in 2010.