Shares of Topgolf Callaway Brands Corp. rose after hours on Thursday after the golf giant nudged its full-year sales and adjusted profit forecasts higher — as the popularity of its Topgolf entertainment facilities helps counterbalance easing demand for golf equipment.
Topgolf Callaway Brands
MODG,
— which makes Callaway golf gear and runs Topgolf, a chain of entertainment venues with driving ranges — said it expected 2023 sales of between $4.415 billion and $4.47 billion, or growth of 10% to 12% compared to last year. That’s a bit better than prior expectations for gains that were roughly above 10%, and better than FactSet estimates for $4.39 billion.
Executives said they expected Topgolf Callaway’s “active lifestyle” segment — which includes clothing, golf bags, shoes and other accessories — to grow 2023 sales “at a low teens percent” compared to last year. And they said they expected Topgolf, which Callaway merged with in 2021, to drive around $1.9 billion of those sales, as off-course golfing grows in popularity.
“For the first time, off-course participation surpassed on-course participation, a trend we believe will continue,” Chief Executive Chip Brewer said in a statement.
Still, management expected golf equipment sales to be roughly flat — due to the economy, competition and retailers’ price-cutting efforts to clear their inventories last year, after inflation remolded more consumers’ purchasing habits around essentials.
“We feel very good about our relative position and competitiveness in this segment,” Brewer said during the company’s earnings call. “However, in our forecasting, we’re also taking into account the inventory catchup that occurred in 2022, some potential economic pressures, and more competitor launches this year versus last.”
The company forecast full-year adjusted EBITDA — or earnings before interest, taxes, depreciation and amortization — of $620 million to $640 million, above an earlier forecast for around $600 million.
For the first quarter, the company forecast sales of $1.135 billion to $1.155 billion, with the midpoint higher than FactSet forecasts for $1.136 billion.
Shares rallied 4% after hours.
Topgolf Callaway Brands was formerly known as Callaway Golf. The new name took effect last year to reflect the merger with Topgolf, whose driving ranges feature dartboard-like targets that golfers can aim for when they tee off. The merger between the two followed a surge in interest in outdoor sports, such as golf, in 2020 and 2021, as pandemic restrictions rendered many indoor activities off-limits.
For the fourth quarter, the company lost 39 cents per share, more than what was forecast by FactSet. But sales of $851.3 million topped expectations.
Shares of Topgolf Callaway Brands are down 6.2% over the past 12 months. By comparison, the S&P 500 Index
SPX,
has fallen 11% over the past year.
