2004: Business - Huffy’s financial woes leave golf division in limbo
Huffy Corp. is on the auction block, though it’s not clear what impact that will have on the company’s Tommy Armour Golf division.
The Miamisburg, Ohio, company has retained Lazard Freres & Co. LLC to explore the sale of parts or all of the company, and a source close to the situation said Huffy has made its financials available to bidders.
The company postponed its first-quarter earnings report three times in May, pointing to a “significant reduction in valuation” of “certain intangible assets,” which it did not identify. Huffy already announced that it anticipates a first-quarter loss significantly higher than the $1.4 million shortfall it suffered during the same period a year earlier, and doesn’t expect to return to profitability until 2005.
Huffy has indicated that its golf division has been one of the company’s few bright spots. The division, which includes the Armour, Ram, Zebra and TearDrop brands, apparently is profitable and generating $40 million to $50 million in domestic sales annually, according to sources.
But that division is undergoing changes. Huffy earlier this year announced plans to consolidate its operations in Ohio, and it’s not clear how many members of the Toronto-based golf division will relocate. Bill Dey, senior vice president, left the company at the end of May, preferring to keep his family in Canada. Mark Adams, custom-golf manager, plans to move to the Ohio office, though others’ intentions are unclear.
Despite uncertainty about its future, the company has attracted new talent.
Kirk Peglow, a former Wilson Golf and Dick’s Sporting Goods executive, was hired in March as general manager of Tommy Armour Golf. He began rebuilding his staff last month, hiring: Jim Howell, former vice president for Northwestern, a mass-market clubmaker, as Armour’s director of sales; Scott Beasley, formerly of KemperSports Management, as regional sales director; and Kim Calhoun, former MacGregor Golf marketing director, who will hold the same title at Armour.
Huffy had sought to become a full-line sports company, marketing products everywhere from specialty stores to mass merchants. But several fiscal problems apparently have had a ripple effect throughout the company.
When The Sports Authority and Gart Sports, the nation’s largest andthird-largest sporting goods retailers, respectively, merged last year, they had their basketball backboard vendors bid for the business. Huffy, a major backboard supplier, lost out to competitor Lifetime Products Inc.
In addition, when Huffy acquired Gen-X Sports in 2001, it not only acquired the golf business but also some action-sports brands that underperformed. Those brands were sold back to the original owners in March. Huffy also sold its services-to-retail segment last month.
It’s not clear whether the entire company will be sold or just certain divisions, though potential acquirers likely would be more inclined to cherry-pick specific businesses rather than swallow Huffy’s diverse portfolio whole.