Topgolf Callaway Brands has reported better-than-expected profit for the second quarter and is exploring options for its Topgolf business, including a possible spinoff.
The company’s net revenues fell 1.9 per cent year-over-year to $1.157 billion, driven by a 8.2 per cent decrease of golf equipment and 3.2 per cent decline of active lifestyle. Meanwhile, sales at the Topgolf segment increased 5 per cent thanks to additional venues.
Net income slid 47.1 per cent to $62 million, and adjusted EBITDA edged down 0.3 per ent to $206 million. Despite the declines, the bottom-line numbers were ahead of the company’s guidance.
Topgolf was the only segment to report higher operating income for the quarter with a 27.5 per cent increase. Golf equipment and active lifestyle saw a 19.7 per cent and 24.6 per cent decrease, respectively.
Chip Brewer, president and CEO of Topgolf Callaway Brands, said the company was able to gain market share despite macro headwinds including the cumulative impact of negative FX trends, persistently high inflation and softer foot traffic.
The company remains convinced that Topgolf is a “high-quality business with significant future opportunity” and is in the process of conducting a full strategic review of the segment, Brewer continued.
“This review includes the assessment of organic strategies to return Topgolf to profitable same-venue sales growth, as well as inorganic alternatives, including a potential spinoff,” he elaborated.
The company has lowered its full-year outlook, expecting consolidated net revenues to be in the range of $4.2-4.26 billion.