The results were achieved despite an estimated $15 million negative impact from changes in foreign currency rates and reflect the acquisition of Jack Wolfskin in January 2019, which contributed $93 million in net sales, said Callaway in a press release.
For the first quarter of 2019, the company’s gross margin decreased 350 basis points to 46.2 per cent compared to 49.7 per cent for the first quarter of 2018, which is slightly better than the company’s expectations.
“We are pleased with our first quarter 2019 results and the strong start to the year in both our golf equipment and soft goods businesses,” said Chip Brewer, president and chief executive officer of Callaway Golf Company. “These results reflect the addition of our Jack Wolfskin business as well as strong growth in all major product categories and regions. We are especially pleased to be able to deliver these results despite foreign exchange headwinds and flat golf market conditions in the first quarter.”
“We remain excited about the long-term prospects for the Jack Wolfskin brand and the growth and scale opportunities it presents for our overall apparel portfolio. In the short-term, however, we are lowering our outlook for this business for 2019 due to lower than anticipated pre-books for the fall/winter season as a result of the much reported softer market conditions in Central Europe and China. We firmly believe that this will be a short-term issue and we remain excited about this business over the long-term. Fortunately, given our brand momentum and the success of our 2019 product lineup, our golf equipment and TravisMathew businesses are exceeding our expectations, allowing us to confirm our full year net sales and adjusted EBITDA guidance despite stronger foreign currency exchange headwinds,” added Brewer.
The company reiterates its previous full year 2019 net sales guidance of $1.67–$1.70 billion, a growth of 34—37 per cent than the previous year. Due to softening market conditions in Europe and China, the company now expects that Jack Wolfskin’s full year 2019 net sales will be 4—6 per cent, lower than the previous estimate of $382 million. Given the strong 2019 first quarter growth in the company’s other golf equipment, apparel and accessories businesses, the company anticipates that growth in those other businesses will offset the expected lower sales in the Jack Wolfskin business. These estimates assume no further material changes in foreign currency exchange rates in 2019, which are expected to have a negative $35 million impact on 2019 full year net sales compared to 2018. (PC)
Fibre2Fashion News Desk – India
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