The consumer equipment segment of the industry continues to provide interest, intrigue and excitement not seen for several years. Not since TaylorMade acquired Adams Golf and Chip Brewer jumped ship to Callaway immediately preceding have we seen this type of multi-event activity in the relatively staid and predictable equipment segment.
As 2016 winds to a close, we’ll have seen 4 major events this year that point more toward consolidation and efficient markets than any indicator of growth or expansion. If we count the TaylorMade adidas Golf (TMaG) sale announcement (I’m cheating a little here, it was telegraphed in August of 15 I believe in adidas’ investor communications), we then saw Nike exit the equipment business (Aug) followed by Golfsmith’s bankruptcy filing (Sep) and subsequent sale and now the Acushnet IPO (Oct) which seems to be the telegraphed gameplan from the FILA Korea deal back in 2011. In this issue I’ll take a look at the current state of several of those events and what it suggests the “betting money” is wagering on golf:
• TaylorMade adidas Golf – Still searching for a suitor, 14 months and counting…
• Golfsmith gets split – Golf Town to continue as an ongoing operation, Golfsmith US stores now at the mercy of golf-schizophrenic Dick’s Sporting Goods
• Acushnet IPO pricing comes in below the range ($17 vs. $21-$24/share), indicating the market likes it, but not as much as hoped (arbitrage anyone?)
If we add in the fact that Nike earlier this year chose to simply shutter their golf equipment business rather than trying to even conduct a sale of any of the technology they’ve developed in their 16 years of existence, the equipment segment of our industry is being reshaped by market forces. I believe the common theme is we need to be slimmer and adapt to changing retail patterns (i.e. big box retailing is fading) and consumer preferences (being more critical of “new and improved” as well as the marginally increasing adoption of custom fitting among the most avid consumers). To be fair, winners will emerge from this cycle but for all those golf consumer magazine columnists and editors who have recently suggested that consumer equipment isn’t under duress, they must be looking at a different set of facts than I. Speaking of facts, let’s get into some behind the above 3 events and how I interpret the net effect.
For our subscribers, read on for my take on the supporting fact and color commentary. For our Executive Summary recipients, you can get the rest of the story one of three ways (all can be previewed and purchased at Pellucid’s website (www.pellucidcorp.com):
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