Topgolf Callaway Brands has exceeded market expectations for its financial results for the first quarter of 2025, after the company reported better than forecast figures across all sectors of its business in the face of some significant economic headwinds.
The company reported revenues of $1.09 billion for the first three months of the year, up on the forecast $1.07 billion, but down 4.5% on the same period for 2024, highlighting the softening of demand due to a lack of consumer confidence in the wider economy.
With the impact of the proposed increase in tariffs on imported goods also being felt across many industry sectors, next quarter’s revenue guidance is down to $1.1 billion, 2.5% below analysts’ estimates, although Callaway Topgolf’s non-GAAP profit of $0.11 per share was significantly above analysts’ consensus forecast.
The company’s share price rose 4.2% to $8.25 immediately following the announcement of the Q1 results.
Chip Brewer, President and CEO of Topgolf Callaway Brands, said: “Q1 was a strong quarter for our company, as we met or beat expectations in all segments of our business.”
Discussing the potential impact of US tariffs, Brewer noted, “Assuming current rates of approximately 10% for all countries of origin other than Mexico, Canada and China, this year’s unmitigated impact would be approximately $25 million, an increase of $20 million versus our last call.”
Breaking down the company’s results into its different elements for Q1, the golf equipment segment (Callaway/Odyssey) saw revenues decreasing 1% to $444 million, although operating income increasded 24% to $102 million, driven by improved gross margins.
Meanwhile, revenues for golf entertainment business Topgolf for Q1 decreased 7% year-over-year due to lower same venue sales, with operating income decreasing by $15 million to a $12 million loss. The company revised Topgolf same venue sales guidance to down 6%-12% for the full year and expects Q2 to be down 7%-12%.
Full-year Topgolf revenue guidance was lowered to $1.68-$1.79 billion, which is $45 million lower than previous guidance, while maintaining adjusted EBITDA guidance of $240-$300 million for Topgolf.
Artie Starrs, CEO of Topgolf, reported, “Topgolf’s Q1 same venue sales were down 12% and in line with our guidance,” but noted improvements attributed to new value-focused offers, specifically Sunday Funday and Topgolf Nights. “Our number one priority is to drive traffic growth and improve value perception, which we believe is key as we navigate the current environment and for the long-term health of the brand.”
Brewer added: “We have made the decision to reset the positioning of Topgolf, while at the same time continuing our efforts to drive efficiency as well as continually improving and refreshing the experience.”
As part of a renewed focus on its core businesses, last month saw Topgolf Callaway agree terms to sell outdoor clothing brand Jack Wolfskin to Anta Sports. The transaction is valued at $290 million and is expected to be completed in the second or early third quarter of 2025.
Brewer said: “This sale will allow us to increase our focus and optimize our resources on our core business. Importantly, the proceeds will further enhance our balance sheet and liquidity, reinforcing our financial flexibility ahead of our planned separation of Topgolf from our core operations. We believe ANTA Sports will be a good steward of the Jack Wolfskin brand and we thank our Jack Wolfskin employees who have worked diligently to right-size this business and prepare it for this next chapter.”
