Old Tom Capital’s Post

Topgolf — the driving range chain where families, friends, and colleagues can whack a few balls onto greens littered with interactive targets — isn’t getting the footfall it used to, leading parent co. Topgolf Callaway Brands Corp. to explore a potential spinoff. Golf ball, bag, and club-making giant Callaway Golf acquired Topgolf in a 2021 deal that valued the make-golf-fun-again brand at more than $2 billion, keen to get in on the less stuffy off-course craze that Topgolf has capitalized on since it was founded 24 years ago. In its latest report, however, the company bemoaned “softer than expected” traffic at the ranges, despite CEO Chip Brewer claiming last year that more people would be visiting a Topgolf in 2024 than “playing traditional golf”. FORE! (quarters of decline) Reduced visitor figures have been weighing on Topgolf’s top line too, with same-venue sales declining in each of the last 4 quarters, as the allure of grooving your swing while surrounded by “loud music, giant targets, giant TVs, and hand-crafted food & drinks” has started to fade a little. In previous quarters, the company had explained that the falling figures were just a correction following a “post-Covid surge in the corporate events business” in the preceding year. The further we get from the pandemic, though, the more difficult it becomes to explain the drops away, with Brewer conceding in Q2 that he’s been “disappointed” with Topgolf’s same-venue sales figures and the company’s share price for some time. Topgolf Callaway Brands stock is down 19% in the last 5 days, and down more than 67% since its May 2021 peak. Chartr #golf #callaway #golfindustry #topgolf #economics #earnings #business

Callaway Golf has had an interesting couple of weeks. They have launched their new Apex Ai200 and Apex Ai300 irons. Callaway Golf's third launch is the new TiFusion, which successfully blends titanium with steel to create a concept iron that will offer something completely different, similar to what TaylorMade Golf Company did when it launched its first carbon-faced driver. As Topgolf/Callaway announced its Q2 and H1 financials, we got an indication of potential trouble for the brand. Topgolf could be sold off. On the surface, Topgolf is a successful brand; new locations are opening worldwide, including its hundredth location in California. We understand now that the existing (same-venue) locations aren't creating a solid financial foundation on which the business can build. Attempted synergies between Callaway and Topgolf haven't turned things around, leading to the CEO of Topgolf/Callaway, Chip Brewer, announcing an immediate review to take place. So, what will happen? Will Topgolf be sold off? Post your comments below. You can also find out how Acushnet faired in Q2 by clicking on the link below to read the full details in Golf Business Review's latest weekly analysis of the golf industry. #golfindustry #golfbusiness #financialstatements #golfbusinessreview https://lnkd.in/da7u4iqM

It seems Topgolf is facing a challenging environment, particularly with shifts in consumer spending and preferences. The initial expectation that recreational players would transition into serious golfers hasn’t materialized, which indicates a disconnect between the experience at Topgolf and the deeper engagement with the sport. The 8% decline in same-venue sales reflects broader economic pressures and changing recreational spending habits, especially for larger groups. This suggests that while serious golfers are consistently supporting traditional courses, the recreational segment is becoming more selective about where they invest their time and money. Comparatively, Bowlero's success indicates that not all entertainment venues are experiencing the same downturn, which may highlight the unique appeal of bowling or the need for Topgolf to reevaluate its offerings. The potential spin-off could allow Callaway to focus on its core golf equipment business while exploring ways to revitalize or restructure Topgolf. They may need to enhance the Topgolf experience, possibly by introducing more engaging events or promotions that encourage both casual and serious golfers to participate. Overall, adapting to current consumer trends and preferences will be crucial for any future success.

TaylorMade Golf has acquired putter designer Logan Olson to expand its portfolio of golf and experiential brands. Headquartered in Fortuna, CA, Olson designs and manufactures bespoke and small-batch putters. With the acquisition, TaylorMade Golf expanded its presence in the putter market, including its popular Spider models. #34

"Lately, the Topgolf business has been hit hard by slowing consumer spending. Same-venue sales fell 8% in the second quarter from a year earlier, the fourth consecutive quarter of declines. The sales drop was even worse for big-group events because of “corporate belt-tightening,” according to the company. That is quite the contrast with bowling-alley operator Bowlero, which reported a same-store sales increase in the same quarter. Eric Wold, equity analyst for B. Riley Securities, noted that movie theaters and theme parks also haven’t experienced the degree of slowdown that Topgolf has seen recently. The steeper price tag might be one contributor: In its location in Edison, N.J., for example, it costs about $155 to reserve one bay for a two-hour session during peak hours. And that doesn’t include food or drinks. Topgolf is trying out different ways to lure customers, including variable pricing, tweaks to its promotions and adding concerts and live DJ nights. In all, Topgolf Callaway’s shares have shed nearly 52% since unveiling the deal, a contrast with peer Acushnet (owner of Titleist), which has appreciated 83% over the same period. This is despite the fact that the postpandemic period has been “the greatest period for the sport of golf and the golf equipment industry” since the peak of Tiger-mania more than 20 years ago, according to Joe Altobello, equity analyst at Raymond James. Last year was the record for rounds played in U.S. history, and that number was still growing through mid-2024, according to a research note from Jefferies."

The article underscores a crucial lesson in today's fast-paced business world: bold ambitions without the ability to navigate real-time market shifts can lead to significant financial setbacks. A visionary outlook is essential, but it must be complemented by agility and a data-driven approach. Sustainable success demands the ability to assess changing market conditions and pivot strategically when necessary. In a volatile environment, it's not just about setting ambitious goals, it's about having the operational resilience and strategic foresight to turn those goals into reality.

Duffers are ruining things for Topgolf Callaway Brands. Serious golfers are reliably showing up on golf courses, spending money on their equipment and golf balls. But recreational players are no longer as keen on shelling out some $70 an hour on a driving range for fun these days. This has been just one of many problems plaguing the company since it bought recreational driving-range operator Topgolf. Hence its decision to spin off the Topgolf business. The company said earlier this month that the target spinoff date would be in the second half of 2025, though it also said it would be open to other options such as an outright sale of Topgolf if an attractive offer shows up. The company initially thought that visitors to Topgolf would become newbie golfers who might seek out its products after trying them out at those venues, which carry Callaway Golf equipment. As it turns out, hitting a few balls at a recreational driving range isn’t enough to convert people into Callaway faithfuls. Lately, the Topgolf business has been hit hard by slowing consumer spending. Same-venue sales fell 8% in the second quarter from a year earlier, the fourth consecutive quarter of declines. The sales drop was even worse for big-group events because of “corporate belt-tightening,” according to the company. That is quite the contrast with bowling-alley operator Bowlero Corporation, which reported a same-store sales increase in the same quarter. Eric Wold, CFA equity analyst for B. Riley Securities, noted that movie theaters and theme parks also haven’t experienced the degree of slowdown that Topgolf has seen recently. Read analysis from Jinjoo Lee: https://lnkd.in/eXgkbDfw

Are you familiar with Topgolf Callaway Brands? You may recognize the name Callaway, but the company is actually a conglomerate that owns several globally recognized golf brands. And yes, what you see in the chart is the massive explosion in golf popularity that occurred during the pandemic. Interestingly, unlike many other pandemic winners, the company continued to grow in 2023 (after the pandemic period). However, in its Q1 2024 report published two weeks ago, net revenue dropped by 2% y/y. Has the turning point finally arrived?

Exciting times in the golf and country club industry! Just came across this fascinating article by Andy Medici detailing the recent acquisition trends and market dynamics reshaping our favorite pastime. The resurgence of golf’s popularity combined with the multiple revenue streams —from greens fees to restaurant sales and monthly dues—make them attractive investments. Plus, the shift away from traditional real estate sectors like office and retail towards more stable revenue models is fueling investor interest. As technology continues to evolve, it’s clear that the allure of a real-world golfing experience remains unmatched. Far from being threatened, technology enhances the game, offering new ways to measure performance and enhance player experience. Exciting times for the golf industry, with plenty of opportunities on the horizon! #GolfIndustry #privateclubs #DanielCommunities Read the full article - https://lnkd.in/euXMcYxZ.

Really great piece here by Nigel Oddy, CEO @ American Golf, on his career in the retail industry & the re-set and future-proofing that the brand have undertaken to appeal to the masses following a surge in participation across a wider demographic post pandemic. Big fan of what’s being delivered at American Golf - their stores are meticulously planned, and very interactive, to offer a great experience, and their staff are incredible well clued-up around golf and their product range. Also their growth in investment around digital, data and customer has been great to see - there is a great connection between the physical and digital experiences, and a real sense of customer-centricity in the direction the brand is taking. Upon joining American Golf, Nigel instructed the business to sell their golf courses and hone in on excelling at becoming the best at what they are - a retailer! He’s quoted as saying “I’m good at selling things, I’m no good at irrigation”, which I think is genius. Nigel states in this piece that he often uses the phrase ‘retail is detail’, and the re-set and investments definitely align to this expression! #retail #omnichannel #consumer