Is Callaway In Trouble?

I was at scout camp last week and missed much of the news, but a story about Callaway replacing its executives intrigued me. It seems the company is in a bit of trouble:

Callaway’s problems are evident across various parts of its business:

• Sales in the critical metalwoods segment, the high-margin category on which Callaway built its brand in the 1990s, continue to lag. That segment accounted for $305.9 million in sales in 2007, but fell to $225.4 million in 2010.

• Despite Callaway’s acquisition of Top-Flite in 2003, the company has struggled to gain traction in the ball business. Total ball sales were $176.5 million in 2010, the lowest level since 2003, before the integration of Top-Flite.

• Domestic sales have been in decline, falling to $468.2 million in 2010 from $597.6 million in 2007.

• Callaway’s efforts to build its international business have met with mixed results. International sales peaked at $563.2 million in 2008, but fell to $495.5 million in 2010. Annual sales in Japan rose from $103.4 million in 2005 to $166.5 million in 2008, but since have been flat, finishing 2010 at $164.8 million. European sales, which reached $193.3 million in 2007, fell to $130.1 million in 2010 – far below even the 2005 level ($166.2 million).

I’m going to suggest that Callaway get radical in its efforts. De-emphaize the traditional marketing via pro staff and focus on getting clubs into the hands of “rain makers.” As I’ve written before, I don’t know anyone who buys a club because Pro X plays them. I do, however, know people who buy clubs and balls because their friends like them, because their pro recommended them, because they liked them at a demo day, or because a blogger wrote about them.

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3 thoughts on “Is Callaway In Trouble?”

  1. Well, Callaway had me 100% (with the exception of some wedges and the Enterprise putter) for about 6-7 years.  They lost me.  If anyone from Callaway wants to know why – here it is:

    The Diablo line was about neat graphics and a “cool” name.  Replacing Big Bertha was a mistake.  Big Bertha was pretty much the standard for game improvement – it got a little boring, but instead of coming out with an exciting design or some innovation they change the name.  Lost name recognition.  That didn’t affect me so much, but I think it had an impact on others. 

    I had the X series and FT series equipment.  X-14s got me started with Callaway and X-20s were that replacement.  I had planned on going with X-24 or X-26, but instead they ditched that line for Razr.  I actually liked the X-24, but Graphite Stiff wasn’t a standard option.  Others I know found the orange off putting.  3 years ago, there were about 6 X-20 players in my group, most had a previous X-series.  Now there are still some X-20 players, but the ones that have changed clubs have left Callaway too.

    Then the drivers – 2-3 years ago, Callaway pushed i-Mix.  I guess that sort of fell flat, because after a couple years that push was off.  Further, the top drivers were “FT” something.  This year the top driver is the Razr Hawk.  Razr- again dumb name, plus it equates with the X-line, which the X-line was the mid-tier.  Then add Hawk, which conotes some of the lower-tier Callaway products.  All the other majors – Nike, TaylorMade, and Titleist have all gone adjustable.  It is i-Mix squared – but instead of just changing a shaft, you can change the shaft or lie, loft, and draw bias – all at the $400 price point where Callaway has a non-adjustable driver. 

    I don’t think Callaway should drop the pros, but they just need to catch up.  They need fully adjustable drivers and fairway woods now – they need to stabilize their lines (and I think really need to re-examine if they should release an X-26 line) – and they should make a 4-6 hybrid & 7-P iron set

    Callaway advertises that the Razr Hawk is 6 yards longer than the R-11, but I have heard it from salespeople and others – “What shaft was in each?  And was the R-11 tuned on setup?”  That info isn’t in the ads.

    Reply
  2. BTW- in my bag- 7 months ago it was Callaway X-24s, FT-IZ driver, X-Hot 3 wood, X 5-wood, and Callaway hybrids. 

    Now-
    Titleist 910D2 Driver, 910F 3-wood
    Adams Tech V3 hybrids and irons

    Reply

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