MW Topgolf Callaway wants to focus on golf equipment, but expects more competition there

By Bill Peters

'This is clearly going to be an interesting year,' CEO says, as company navigates consumer anxiety and tariffs

Shares of Topgolf Callaway Brands Corp. slipped after hours on Monday after the parent of Topgolf and Callaway-brand golf clubs warned of weaker sales at the driving-range chain and more competition in golf equipment, although it said first-quarter trends were solid, marked by a surprise adjusted profit.

The company made that forecast as it tries to focus more on golf equipment and offload Topgolf, a driving-range and entertainment chain whose sales have struggled as consumers navigate higher costs of living.

Shares slipped 1.3% after hours on Monday. The stock finished 7.6% higher during regular trading.

That regular-session rally came amid broader market relief after the weekend's trade talks between the U.S. and China, which led both nations - for now - to cut steep tariffs they had placed on each other. Analysts have also been focused on the trade friction's impact on leisure activity.

Topgolf Callaway $(MODG)$ - which makes its golf clubs and golf balls in the U.S. as well as nations like Mexico, China and Vietnam - said that it was sticking with its full-year sales outlook, despite "the current macroeconomic conditions with increased tariffs and a softer consumer environment." The company said the strong start to the year played a role in maintaining that forecast.

However, it lowered its full-year sales outlook for Topgolf, an amusement chain that combines driving ranges with restaurant service. And it said its revenue outlook for the second quarter included "the expectation for a more competitive launch environment" in its golf equipment business.

Overall, management said they expect $4 billion to $4.185 billion in sales this year. For the second quarter, they expect $1.075 billion to $1.115 billion in sales, a bit below the $1.123 billion forecast by FactSet.

Topgolf last month also announced an agreement to sell off its Jack Wolfskin clothing business. It also sold off its WGT gaming business last year.

For the first quarter, Topgolf Callaway reported adjusted earnings per share of 11 cents, compared with Wall Street's expectations for a 6-cent per-share loss. Revenue of $1.09 billion was above estimates for $1.07 billion.

Chief Executive Chip Brewer said in a statement that he was pleased with demand for golf equipment during the quarter, helped by the popularity of its Elyte Driver golf club. He also said cost cuts from last year, and efforts to reduce the impact of tariffs, had begun to pay off.

"This is clearly going to be an interesting year, but we believe we are well-positioned to create shareholder value via building on our core strengths, achieving our consolidated financial goals and through the sale of our Jack Wolfskin business and the planned separation of Topgolf," Brewer said.

-Bill Peters

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May 12, 2025 17:48 ET (21:48 GMT)

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