Adams Golf’s headquarters in Plano, Texas, will be closed, and TaylorMade-Adidas Golf faces restructuring as part of a broader strategy by parent Adidas Group to counter sagging sales.
In its “First Half Year Report,” Germany-based Adidas Group cited a sales slowdown and internal 18-month forecasts calling for continued challenges in the golf division.
Revenues at TaylorMade-Adidas Golf (which includes TaylorMade, Adams, Ashworth and Adidas Golf) decreased by 27 percent on a currency-neutral basis, compared with the first half of 2013, according to the report.
“The pronounced decrease is due to a continued weakness in the golf market, where retail inventories remain high,” the report said. “This resulted in double-digit declines in metalwoods and irons in the first half of 2014. Currency translation effects negatively impacted TaylorMade-Adidas Golf sales in euro terms. Revenues decreased 31 percent to 535 million euros (approximately $715 million) from 771 million euros ($1.03 billion) in the prior year.”
The news comes less than a month after Dick’s Sporting Goods, the largest U.S. retailer of TaylorMade products, fired nearly 500 PGA professionals who were employed in the golf sections of its 560 stores.
Adidas Group does not forecast a bounceback in sales or revenue through 2015.
“The poor retail sentiment and the slow liquidation of old inventory in the golf category across the globe will lead to a significantly more challenging top-line and margin development for TaylorMade-Adidas Golf in the second half of 2014 than originally expected,” the report said. “The group will therefore take further measures to reduce inventory in the marketplace in the second half of 2014. In addition, management will also begin a restructuring program at TaylorMade-Adidas Golf.”
Dave Cordero, a public-relations manager at TaylorMade, said in a statement, “We recently announced that a reorganization of our company was being planned. This restructuring includes the consolidation of our Adams Golf business currently located in Plano, Texas, to our global headquarters in Carlsbad, Calif.”
A 15-percent reduction in TaylorMade-Adidas Golf’s global workforce, spread across TaylorMade, Adams, Ashworth and Adidas Golf, is planned, Cordero said. No timetable was given for the closure of Adams’ headquarters, but the company will continue to produce clubs.
Adams Golf, founded by Barney Adams in 1987, was acquired by TaylorMade-Adidas Golf on March 19, 2012, for approximately $70 million.
Cordero also said in the statement that TaylorMade is “realigning its workforce and planning to invest in new areas to strengthen TaylorMade-Adidas Golf brands.”
Herbert Hainer, chief executive officer of Adidas Group, wrote in the report, “At TaylorMade-Adidas Golf, given the inventory that is still in the market, we will carefully look at new launch and introduction timings. In addition, we will begin a restructuring program at TaylorMade-Adidas Golf to align the organization’s overhead to match lower expectations for the golf industry’s development. In total, I expect this will impact second-half operating profit by 50 million-60 million euros ($66.8 million-$80.2 million). As the dominant market leader, we take this initiative now to secure our lead, and to be the first mover in reinvigorating the market. Our innovation pipeline is full and we are set to go, whenever we feel the market is ready.”