Who Wants to Own a Golf Equipment Company?
Golf equipment isn’t a very good investment these days. Look at Callaway. It’s stock has dropped 20% since July ($15.71 vs. $19.49), Golfsmith has faired even worse crash-diving 47% ($5.77 vs $10.95).
Two articles came to my attention on the golf equipment business recently: Cleveland Sale Appears Imminent and Huffy Corporation Sells Tommy Armour. Both appeared in GolfWeek Business. For leveraged buyout groups like the one that is selling Cleveland and the sporting goods conglomerate that is unloading Tommy Armour, golf isn’t fitting into their idea of making a profit.
Quicksilver, the current owner of Cleveland because of its acquisition of Rossignol skis in 2005, wants to dump it because the parent took its first annual loss in 15 years. Huffy, which acquired Tommy Armour, TearDrop, Ram, and Zebra when it purchased extreme sports manufacturer Gen X in 2002, later emerged from bankruptcy in 2005 and no longer thought golf fit into its future plans. Rumors are that Cleveland could be a TaylorMadeAdidas target, but nothing is official.
Last year it was sporting good retailers consolidating. Is 2007 the year for golf equipment manufacturers?
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