SBD/June 3, 2013/Marketing and Sponsorship

Callaway Seeks To Rebound Under CEO Brewer, Focusing On Product Performance

Brewer's strategy focuses on better products and touting performance in ads
Callaway Golf "used to be an industry standard-bearer -- known for its top quality clubs and quirky marketing," but a "string of lackluster products, unfocused marketing and ineffective cost-cutting tarnished the once-dominant brand," according to Mike Freeman of the SAN DIEGO UNION-TRIBUNE. The company has "lost money for four straight years," and is on "its third CEO seeking to recapture past glory." Its stock "traded in the $20 range" when Founder Ely Callaway died in '01, but today shares "linger below $7." Web Street Golf Report Publisher and industry analyst Terry McAndrew said, "Callaway’s challenge is Ely’s one failure -- that being a succession plan to manage the company." McAndrew added, "After his passing, it lost its focus and is now attempting to regain it in its core-product categories under [Callaway President & CEO Chip Brewer].” Brewer, who was "hired just over a year ago after a long career at Adams Golf, has launched an old-school turnaround strategy: build better products, energize the company’s culture and tout performance in advertising." Analysts "hope Brewer’s golf industry roots will help him avoid missteps made by the previous regime." Baird Equity Research analyst Craig Kennison said, "His impact on product development, operations and marketing -- and better relationships with key retail partners -- should drive better results." Analysts said that Callaway is "showing positive signs." First quarter results "were solid." Gilford Securities analyst Casey Alexander said, "Chip definitely has things going in the right direction." Freeman noted Callaway’s marketing has "shifted back to the tried-and-true message of hitting the ball farther." On the product side, "much of the sales gains have centered" on the company’s X-Hot fairway woods. But the driver is the "most important product" in the golf business. McAndrew said, "Callaway will need to regain market share in drivers sooner or later" (SAN DIEGO UNION-TRIBUNE, 6/1).
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