As if generating more revenue and eliminating losses aren’t challenging enough, Callaway Golf Co. has another pressing task: Re-energizing its brand.
The assessment came from none other than Anthony S. Thornley, the company’s newly appointed interim CEO, who took over the top post following last week’s resignation of George Fellows. Thornley is a former president of Qualcomm Inc., a wireless technology company.
Fellows, the former Revlon chief who had led the Carlsbad, Calif.-based equipment manufacturer since 2005, stepped down, citing personal reasons. But his tenure, especially of late, had been marked by lackluster financial results, and the company is concerned that harbingers of better performance aren’t surfacing. Callaway announced June 29 that it expects to post a net loss of $55 million on sales of $270 million for the second quarter. The company recorded net income of $11.5 million on $303.6 million in sales for the same period in 2010.
“The bottom line is that our results are not satisfactory, and the board believes now is the time to make changes to our organization,” Thornley, 65, who had been serving on Callaway’s board, said during a June 30 conference call.
Callaway board chairman Ron Beard said officials would not be “starting a search at this time” for Fellows’ permanent successor. Meanwhile, Thornley did not provide a detailed strategy for Callaway’s revival, but added he is “not taking a short-term view of this job.”
A top priority, he said, is “to strengthen our brand.” The company intends to achieve this goal, in part, with renewed marketing efforts. Funding for the initiative is to come from a portion of the $50 million Callaway plans to save annually from upcoming cost reductions and an undetermined number of layoffs.
In 2007, Callaway’s sales eclipsed $1 billion, but in the past two years sales were $950.8 million and $967.7 million, respectively – the lowest levels since 2004. The company is struggling on multiple fronts, including weakened ball sales and an overall domestic slump. A weak economy and declining golf participation have compounded Callaway’s woes, plus ceding its once-dominant position in metalwoods to rival TaylorMade.
The company’s troubles couldn’t be blamed on outside forces alone, Thornley said, adding that Callaway “is not keeping pace with the industry recovery.”