Tiger’s In – Nike’s Out


He hasn’t put his game on display for over a year and his last PGA Tour win was in August of 2013 but the soon to be 41-year old has created lots of attention by saying he will play in a charity event October 10-11 followed by the Safeway Open October 13-16.

And the company whose clubs he has played since 2002 is getting out, out of the club, bag and ball business to concentrate on shoes and apparel.

Tiger Woods and Nike, inseparable in the minds of many, have had an amazing run together. Woods currently has 79 Tour wins with 14 majors (not all using Nike equipment) ranking second all-time in both categories. Nike though, was never able to come up with a category-defining club in spite of having on the payroll Tom Stites, one of the most respected club designers in the business. What they did however, with Woods under the most lucrative contract in golf, was become the number one golf apparel brand.

It’s no wonder, with the equipment business having at best a minimal-growth future, the decision to leave that arena was made.

Woods and other staff members, most notably Rory McIlroy and Michelle Wie, will continue to wear Nike Swoosh apparel so they will still have a huge presence in the minds of consumers. Golfers just won’t be able to purchase Nike clubs.

The effect the Nike withdrawal from selling equipment is uncertain but a good estimate is it probably won’t be very large. The golf division never had more than $800 million (last year $706 million) in sales but since the breakdown between hard goods and soft goods was not reported, actual club sales are unknown. They never approached a 10% market share in hard goods.

Some in the media are saying Nike’s problems are because Woods hasn’t been playing and that’s incorrect. Nike didn’t have market leadership or even contend for leadership when Woods was at his best, winning multiple times in a season. His presence on Tour alone never could generate the amount of business Nike wanted to dominant the golf hard goods sector but did help push soft goods to the number one spot.

Golf for Nike was a tiny part of their overall business, less than two percent, and several factors virtually preordained their decision. The small market share plus an industry where product lifecycles are measured often in months with relatively large development costs meant staying just didn’t make sense. It was obvious golf equipment had to go.

With Nike paying more attention to golf performance and lifestyle soft goods, the biggest impact could be seen by competing shoe and apparel brands Acushnet’s FootJoy, adidas and Under Armour. Adidas is also leaving equipment and selling its golf brands TaylorMade Golf and Adams. The other major player Acushnet, owner of Titleist, is in the process of going public which typically can create uncertainly in corporate decision making.

This could mean Callaway picks up the major portion of Nike club sales however large it was and undeniably Callaway has been on an upwards trend since Chip Brewer took over as CEO. Privately-owned Ping and others potentially could see a bump in sales as well.

With all that in mind, which clubs will Woods switch to now that he plans to compete and again chase Nicklaus’ record of 18 majors?

Well, it’s not clear he will switch at all and for sure not right away though Woods has said companies are sending lots of clubs to try out. He hasn’t played a Tour event since August 2015 and it’s unlikely he will make a club change soon. Additionally any equipment company paying the amount of money Woods can demand will want their logo prominently display on his cap and shirt so there’s an immediate conflict with his Nike apparel contract. Nike is worth several millions each year to Woods and the contract doesn’t renew until the end of 2018 so he’s not going to put it in jeopardy.

One thing is for sure, fan interest will continue as will the speculation about Woods as he tries to get back to being top of the Tour.

Ten Rounds with Callaway Apex CF 16 Irons


Callaway has two new iron models for next season and both are in stores now. For professionals and low handicap amateurs there are the one-piece forged Apex Pro 16 with progressive center of gravity placement and a very pleasing headshape/top line designed with input from Callaway’s Tour staff.

The second model, Apex CF 16, updates the Apex irons from two years ago and is considered by Callaway to be “a forged iron for all golfers.” In a first for the company’s forged irons there is a cupface construction in the longCallawayApex16CF_400x300 and mid-irons while the short irons (8- through wedges) have had the face plate redesigned. The set tested of 5-iron through A-wedge had True Temper XP 95 stiff shafts. Note: A cupface clubhead consists of two main pieces, the hosel and rear of the head welded to the face whose edges wrap around forming something like a cup. This construction leaves more of the face unsupported allowing for more flexing at impact and added ball speed. Several manufacturers make use of cupface construction for clubs including drivers and Callaway employ’s it in the XR, XR Pro and Big Bertha irons.

The initial impression at address was favorable, the forged heads have a relatively thin topline and as to be expected there is more offset in the long irons that becomes progressively less down through the wedges. On the range before the first round it was evident how “easy” these were to hit and on the course this paid bonuses. Easy hitting in my experience includes the feel, forgiveness and whether the ball flies with the correct trajectory.

These irons rate highly for each of those criteria.

A center h2016_Apex_iron_Explode_250x175it felt very solid and even when the center was missed, though the feedback told me of a poor swing, the feeling was still certainly acceptable not “clunky” as with some irons. This is the payoff of Callaway’s design and from the standpoint of forgiveness, similar positive observations could be made. What really struck me and everyone who I asked to hit the Apex 16 CFs was the trajectory, how quickly the ball got up in the air and from one of the higher handicappers, “the ball soared.”

My conclusion is the combination of the flexibility in the face (which tends to increase launch angle), the way the clubhead is weighted and the fact the XP 95 shafts have a low to mid kick point all would help produce the nice high trajectory most of us like from our irons.

Over the ten rounds trial the Apex CF 16s were excellent at digging the ball out from questionable lies such as those found in the Bermuda rough here in Florida. Ball spin appeared to be dependent on the type of ball used and two of the tour-type golf balls—one being Callaway’s Chrome Soft—had lots of stop, even spinning back on occasion which, as most golfers know, is difficult to do on Florida greens.

The seven club set tested retails for $1049.99 and a set of eight (4-iron through A- wedge) is $1199.99, $200 more for graphite shafts.

Negatives: On downwind shots, because of the ease at getting the ball airborne, the ball sometimes appeared to “float” and into the wind at least considering an extra club was a must. Pricing is at the upper end of the range for premium quality irons.

Recommendation: Easy-to-hit is hard to beat and if evaluating new irons Callaway Apex CF 16s should be near the top of those you try.

Images courtesy of Callaway Golf

Callaway & TMaG Sales Up


The third quarter financials of Callaway Golf (NYSE:ELY) and TaylorMade-adidas Golf reflect small sales increases over the previous year but year-to-date sales for both are lower.

Callaway reported third quarter sales of $176 million with a $3.6 million loss compared with 2014 sales of $169 million and a $1.1 million loss. For nine months sales were $62 million less than last year at $690 million and pretax income was $11 million lower to $50 million. The company says early sales figures for the new Great Big Bertha driver have been encouraging.

TaylorMade-adidas, part of apparel giant adidas Group (OTCMKTS:ADDYY), said third quarter sales rose 6.5% to $173 million driven by double digit percentage increases in metalwoods. Profit margins were lower while year to date sales were $737 million, down 13% from 2014.

Restructuring of TMaG continues with the announcement in the third quarter report further layoffs will occur before year end effecting 14 percent of company employees worldwide. This is on top of a six percent layoff in July and previous layoffs in 2014.

Adidas is investigating sale of the Adams Golf and Ashworth brands, part of TMaG, and speculation is TaylorMade may be sold as well due to continued underperformance of sales and profits. The company acknowledged sales of last season’s R15 driver were “disappointing” but that the M1 driver model introduced in September along with the PSi irons recently announced would provide increases. Both have already been positively received in the marketplace.

10 Rounds with Callaway Chrome Soft


Back last year when I first heard of Callaway Golf’s Chrome Soft golf ball it didn’t strike me as anything special but as more information became available my interest grew. It really got my attention when Callaway people explained the technology behind the new ball saying this will be a “game-changer for them.”

We are used to thinking low compression golf balls while having a softer feel didn’t go as far as those with a firmer feel. Ladies and seniors played the lower compression models since they couldn’t get the distance benefits of high compression golf balls due to their slower swing speeds. Since the introduction of multi-layer solid core balls like the Titleist ProV1 the spread of performance has widened but everyone acknowledged it would be nice to add the softer feel of low compression golf balls to the distance gains of solid core construction.

Building a ball with a very soft core meant, especially with longer clubs, though the spin rate was lower the core didn’t react fast enough to produce distance.

According to Callaway that was true until now. Hex_Control_2pk_LID_rev_FRENCH-ENG_v3

The 3-piece Chrome Soft is billed to have a soft feel and still produce the distance, high ball speed and low spin with their aptly named “SoftFast Core” and a urethane cover.

During February and March I took them to the course for an extended trial and as it turned out, though my northern friends were envious, played them in four southern states for a total 16 rounds.

The questions everyone immediately asks are, “How long were they? Did they go as far as a Pro V1?”

The answer is the Chrome Softs were long, certainly comparable to every other golf ball model including the Titleist’s Pro V1 we have reviewed and certainly within the variability inherent in my very average swing. Coincidentally, we received unsolicited samples from another manufacturer of a “distance and feel” ball and took them along with the Callaway’s on a trip to Georgia.

No contest, the “distance and feel” ball didn’t have anywhere near the “distance” of the Chrome Soft and the “feel” around the greens was like a rock while the Chrome Soft showed control properties we really appreciated. The comments from friends to whom I gave sample sleeves (usually two sleeves so they would have an extended opportunity to make their evaluation) were positive and two of them said they liked the Chrome Soft so much in comparison to their usual brand they would be switching.

Negatives. On some downwind shots, particularly with a driver, it seemed as though the Chrome Soft though hit well, fell out of the air very quickly. Admittedly this is a subjective impression but it happened on more than one occasion. Unfortunately in each case when that happened circumstances were such it wasn’t possible to hit additional tee shots so this remains an impression only worth mentioning in passing.

Secondly some may object to the price but at $38 dozen the Chrome Soft are $10 less than market leader ProV1 and $7 less than the Bridgestone B330-RX series.

Recommendation. The Callaway Chrome Soft is really worth trying and I believe you will be happy with the results.

Callaway Returns to Profitability


Callaway Golf Company (NYSE: ELY) announced yesterday sales and profit increases for the 2014 fiscal year ending December 31 compared to the previous year making 2014 the first profitable year since 2008.

Sales for 2014 were up 5% to $887 million compared to $843 million in 2013 and net income increased to $16 million versus a loss of $9 million in 2013. Significantly, the result of cost control put in place, gross profit as a percentage of sales rose 3% while operating expenses rose only $1 million to $327 million.

Chip Brewer

Callaway President and CEO Chip Brewer

“We are pleased with our results for 2014,” said President and Chief Executive Officer Chip Brewer in a prepared statement. “Notwithstanding challenging market conditions for the golf industry as a whole, we were able to grow sales, increase our market share and return to profitability for the first time since 2008 – a significant milestone for us in our turnaround.”

Reported product category sales increases: woods +8%; irons +12%; golf balls +4%; accessories +2% as well as growth in every geographic segment: United States +5%; Japan +3%; Europe +11%; Rest of Asia +7%; Other foreign countries +1%.

Analysts note the competitive nature of the golf equipment business with club sales dominated by TaylorMade-adidas Golf a division of German-based holding company adidas AG (OTC: ADDY) and ball sales by privately-held Acushnet Company’s Titleist brand. The Callaway product line in the previous golf season did make inroads into the TMaG lead and for 2015 there is a highly touted version of the popular Big Bertha model driver receiving attention from the media and golfers.

“Given the strength of our product line for 2015, which was well received at the recent PGA show in Orlando, and anticipated additional improvements in our operations, we expect for 2015 on a constant currency basis not only sales growth and market share gains, but also further improvements in gross margins and profitability. Golf is a momentum business and fortunately momentum is now on our side.”

According to the company for the next fiscal year, “On a constant currency basis, net sales are estimated to increase by approximately 1% – 4%.  This growth is being driven by an estimated 5% – 6% growth in the Company’s core channel business, partially offset by a change in product launch timing and a reduction in closeout sales compared to 2014.”

Images courtesy of Callaway Golf