Callaway, Dick’s Sporting Goods scores with the growth of golf

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Callaway, Dick's Sporting Goods scores with the growth of golf

Buckets of golf balls on the driving range at the 2021 TOUR Championship on September 03, 2021 at East Lake Golf Club in Atlanta, Georgia.

Sportswire icon | Getty Images

Golf gained almost every metric in popularity in 2020 as people sought out socially distant outdoor activities amid the pandemic.

More than 24.8 million people played golf in the United States in 2020, more than 2% more than the previous year and the largest net increase in 17 years, according to the National Golf Foundation. The sport also saw the largest percentage increase in novice and junior golfers since 1997 – the year a then 21-year-old Tiger Woods won his first major championship at the Masters.

Now, nearly two years since the pandemic first hit the US, and although other activities have resumed, golf has continued to grow in 2021, giving long-standing golf brands like Callaway and Titleist a boost. It has also empowered companies that want to capitalize on the changing demographics and trends within the sport.

Golfers continue to flock to the courses

For many in the golf industry, it was unclear whether 2020 growth was a function of the pandemic or a new turning point for the sport.

By the end of July – the peak of the golf season in the US – the number of rounds played in 2021 increased by 16.1% compared to 2020, according to the NGF. While the July-specific numbers compared to 2020, a month in Since almost all golf courses reopened after pandemic closings in certain states have fallen by 3.1%, the numbers for 2021 are well above the average for the previous year.

While these increases are mainly driven by older, already passionate golfers – the average number of rounds played by golfers rose to 20.2 in 2020, an all-time high since NGF began tracking this statistic in 1998 – younger golfers, and especially female players, saw significant Upward trends.

“New entrants are getting younger, addicted to the game and want to get better,” said David Maher, CEO of Acushnet Holdings golf company, at the company’s conference call with analysts in August on its second quarter results. “A lot of the energy comes from enthusiastic, committed players who just play more and more consistently; more juniors, more women, more younger [players], and more families. “

According to NGF data, the number of female golfers rose 8% in 2020, the largest increase in five years. Forty-four percent of people who played a round of golf on a golf course in 2020 were under 40, and according to NGF data, almost as many people played golf in their thirties as they did in their sixties.

Golf equipment companies are seeing sales growth

This surge in new golfers has been a boon for Acushnet, which owns golf brands like Titleist and FootJoy.

Acushnet’s US net sales rose 117.1% in the second quarter, driven by a 98.1% increase in Titleist golf ball sales and a 111% increase in Titleist golf club sales. In the first half of fiscal 2021, sales in the United States grew 75.2%.

Callaway, which owns several brands of golf equipment and apparel, including the eponymous line of balls, clubs, and other equipment, also saw growth.

Earlier this month, the company raised its financial outlook for the third quarter and full year 2021, citing the overperformance of its brands and the easing of some supply chain disruptions.

“More and more people are taking golf courses [there are] more participants in the game, more consumers, and we believe the long-term trends will be pretty attractive, “Callaway CEO Chip Brewer said on CNBC in June. “The market will be bigger after the pandemic than it will be after it occurs. “

Dick’s Sporting Goods, which sells golf products in its stores, as well as golf specialist Golf Galaxy, have cited the sport as one of its growth drivers over the past few quarters.

“We continue to see steady growth in the golf business,” said Lee Belitsky, CFO of Dick’s Sporting Goods, on the Aug. 25 conference call with analysts on earnings for the second quarter of 2022. “The golf business is still very strong for us.”

While the company does not highlight the performance of the Golf Galaxy stores in its earnings report, CEO Lauren Hobart said that “the golf business at both Dick’s and Golf Galaxy has been huge”.

The company has “invested in talent and built the in-store service model into trusted advisors for golf enthusiasts of all levels,” said Hobart, recently opening its first next-generation prototype store outside of Boston. At this location, the Golf Galaxy Performance Center, golfers can not only buy golf products, but also take lessons, practice in bays and receive individual club adjustments.

In May, South Korean private equity firm Centroid Investment Partners acquired TaylorMade Golf for $ 1.7 billion, the golfing company’s largest acquisition to date. TaylorMade, which makes rackets, balls and apparel, was sold by Adidas to KPS Capital Partners for $ 425 million in 2017.

“The industry is currently experiencing high demand, increased participation with strong long-term opportunities around the world,” said Jinhyeok Jeong, founder and CEO of Centroid Investment Partners, in a press release at the time of the transaction. South Korea is the third largest golf market in the world after the USA and Japan.

Overall, golf equipment sales have slowed in recent months, according to NPD data – sales in June, July and August 2021 fell 2% from 2020, after doubling the first half of 2021 from 2020. In June, July and August 2021, sales increased by 50% compared to these months in 2019.

Matt Powell, senior industry advisor for NPD Group, said more consumers are expected to prefer healthier lives after the pandemic, and that includes an increase in outdoor and sports activities that should benefit golf.

However, it is still unclear how other industries’ supply chain problems will affect golf equipment, which could limit growth.

Acushnet and Callaway executives cited the ongoing supply chain problems in Vietnam as potential road bumps. Acushnet and Callaway declined to comment on this article.

“There are inventory issues, but when we look at most of the categories we track, we see that business is starting on a plateau,” said Powell. “But, [golf sales] We’re moving back to a new, higher level and while we’re not seeing massive growth, it’s a much bigger business than it was two years ago. “

Golf is expanding beyond the course

The rise of interactive golf experiences beyond the typical 18-hole course has also helped golf grow, especially for new audiences.

The growing popularity of TopGolf, which now has 70 locations in six countries following its launch in China earlier this month, was one of the main reasons. While the actual golf experience reflects what can be found on a driving round, TopGolf aims for a more social and playful experience along with drinks and food.

Callaway, which previously owned 14% of TopGolf, merged with the company in March and paid $ 2.66 billion to purchase the remaining stake.

TopGolf reported that it had sales of 1.1 billion euros in 2019.

Virtual coaches, used for both entertainment and high-level golf training, have also grown.

Full Swing, which makes golf simulators for commercial, residential and entertainment venues, was acquired by investment firm Bruin Capital for a reported $ 160 million in July. While the simulators can also be used for other sports, the golf functionality is used by PGA Tour pros such as Woods and Jon Rahm, who is currently number 2 in the world rankings and competes for the European team in the Ryder Cup.

“At the beginning of the off-course gamification of golf, I believe there was a misinterpretation of the implications for the actual game of golf and participation,” said David Abrutyn, partner at Bruin Capital. “It’s been proven to be an entry point into golf, and the more people swing a golf club or experience the sport in a venue, the greater the ability to encourage participation in the sport.”

In addition to the 24.8 million people who played a round of golf on a course in 2020, another 12.1 million took part in an “off-course golf activity” that included driving ranges, venues such as TopGolf or indoor simulators how full swing belong produced.

The increasing amalgamation of traditional golf with technology and other forms of entertainment is a good harbinger for the further development of the sport, Abrutyn said.

The biggest golf events were followed by more spectators this year. In April, The Masters final saw an average of 9.45 million viewers on CBS, up 69% from 2020. In May, the final day of the PGA Championship, an average of 6.58 million viewers were seen, an increase of 29% compared to the previous year. And in June, the US Open finals averaged 5.7 million viewers on NBC, up 76% from 2020.

The sport also sees coverage expanding in new ways. The PGA Tour is partnering with Netflix to create an episodic documentary series likely to be inspired by “Drive to Survive,” the popular Formula 1 focus series that brought new fans to motorsport. NBA star and avid golfer Stephen Curry recently signed a contract with Comcast NBCUniversal to work on a variety of projects, one of which includes creating Ryder Cup content for NBC Sports’ golf channel.

“A lot of people have tried golf and are realizing that it might not be as difficult as they might think, and that is creating a whole new generation of golf fans, especially the younger segment, who will now be fans and committed to the sport.” , he called. “This is particularly exciting for everyone who works in the golf business.”

Disclaimer: CNBC’s parent company NBCUniversal is the broadcast partner of the Ryder Cup.

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