Golf equipment firms stuck in bunker over exodus of players
Once the go-to activity for corporate bonding, golf is suffering from an exodus of players in the US, a lack of interest among millennials and the mass closure of courses.
The tangled personal life of Tiger Woods, who was golf's biggest ambassador, also hasn't helped. All that has taken a toll on firms that make and sell golf equipment, including Dick's Sporting Goods and Callaway.
While almost 260,000 women took up golf, some 650,000 men quit. Slow sales of clubs and other gear dragged down the most recent set of financial results for Dick's, sending its stock on the worst tumble since the retail chain went public in 2002.
"Golf is in a bit of a drought," said Allen Adamson, managing director at brand consulting firm Landor Associates in New York. "It's a pretty high-price sport, and leisure time is getting crunched."
Slow golf sales over the past 15 months created a glut of golf inventory at wholesale and retail outlets in the US, forcing them to slash prices. Dick's is selling some drivers for $99 (€72) that were priced at $299 just 20 months ago, chief executive officer Ed Stack said.
"We don't feel we've found the bottom yet in the golf sales number," Mr Stack said.
The bleak outlook rippled through the golf industry. Shares of Callaway, the California-based maker of golf clubs, tumbled 9pc on one day last week. Callaway had delivered its own dim forecast last month. The company warned that full-year profit could come in at the low end of its previous guidance, especially if discounting is heavier than expected.
"We anticipate a heavy promotional environment while the industry works through excess inventory," CEO Chip Brewer said. The firm hasn't reported an annual profit since 2008.
TaylorMade, the Adidas-owned brand that makes clubs and golf accessories, is also suffering. The business saw a 34pc sales drop in the first quarter, Adidas said earlier this month.
Still, not all golf equipment is in decline. Overall, manufacturers' sales rose 1.2pc last year in the US, according to the Sports & Fitness Industry Association. While sales of golf balls fell 4.9pc, clubs grew 4.2pc.
Though cold weather and the sluggish American economy are providing temporary headwinds, a generational shift may be a bigger cause for concern.
The sport is suffering the biggest decline from younger players, according to the National Golf Foundation, with 200,000 players under 35 abandoning the game last year.
"Everybody's hooked up to their handhelds, so it's social networking instead of sports," said Gerald Celente, publisher of the 'Trends Journal'.
"It's something that's associated with boom times," he said. "Most of society's not moving up, and golf is associated with moving up."