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TaylorMade Woes

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annsguy

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I did not want to paste in the whole article but the headline below paints a picture that tough times are ahead for the golf business at least in hard goods. At least it may provide some values to the consumer.It may also stop some of these companies from producing more product than they market can bear.


Adidas Issues Profit Warning As Golf Sales Plunge, Russia Outlook Worsens
SportsOneSource Media Posted: 7/31/2014
 
Might as well post the article imo.
 
I'd love to see the article posted.
 
Adidas Issues Profit Warning As Golf Sales Plunge, Russia Outlook Worsens
SportsOneSource Media Posted: 7/31/2014

Adidas AG executive board announced important strategic decisions that have been taken to secure and drive growth and profitability as well as address recent developments. As these decisions will impact the Group’s financial results, management is also updating its financial outlook. Management now expects a mid- to high-single-digit currency-neutral sales increase for the full year 2014 and net income attributable to shareholders to be at a level of around €650 million.
In addition, Management postpones the delivery of its Route 2015 targets.


For the second quarter, the Group’s top-line momentum materially improved as expected. Sales increased 10 percent on a currency-neutral basis, driven by 14 percent growth at Adidas and 9 percent growth at Reebok, while sales at TaylorMade-Adidas Golf declined 18 percent. Currency effects continued to play a significantly negative role, impacting top-line results by over 7 percentage points in the quarter. As a result, sales in euro terms increased 2 percent to €3.47 billion ($4.75 mm). Operating profit in the second quarter was €220 million ($302 mm). Net income attributable to shareholders for the quarter was €144 million. Currency translation, less favourable hedging rates, higher marketing spend for the 2014 FIFA World Cup as well as a significantly lower contribution from TaylorMade-Adidas Golf offset the otherwise strong underlying growth from Adidas and Reebok in most major categories and markets.


Taking into account the strong top-line improvements at brand Adidas and Reebok as well as recent developments in Russia/CIS and in the golf market, the following strategic decisions have been taken, which will impact the Group’s financial development in the second half of 2014 and in 2015:



  • Firstly, poor retail sentiment and the slow liquidation of old inventory in the golf category across the globe will lead to a significantly more challenging top-line and margin development for TaylorMade-Adidas Golf than originally expected in the second half of 2014. To ensure the successful execution of our strategy to drive long-term margin improvements in the golf category, we will take further measures to reduce inventory in the marketplace in the second half of 2014. In addition, we will also begin a restructuring program at TaylorMade-Adidas Golf to align the organisation’s overhead to match lower expectations for the golf industry’s development.
  • Secondly, the recent trend change in the Russian rouble as well as increasing risks to consumer sentiment and consumer spending from current tensions in the region point to higher risks to the short-term profitability contribution from Russia/CIS. As a result, management has decided to significantly reduce its store opening plan in the market for 2014 and 2015, and to further increase the number of store closures. These steps are aimed to reduce risk and protect profit as well as to drive a faster implementation of new inventory management principles for that market. Nevertheless, Management remains very encouraged by increasing brand momentum for both Adidas and Reebok as a result of local marketing investments as well as improving store operations.
  • Thirdly, following the strong performance at the 2014 FIFA World Cup , and improving momentum at brand Adidas and Reebok, Management has decided to step up marketing and point-of-sale investments over the next 18 months to secure and drive faster growth rates and market share gains, particularly in the developed markets such as North America and Western Europe. This is underpinned by a strong product pipeline in key performance categories as we further leverage our award-winning Boost technology as well as new product and collaboration initiatives in lifestyle.
  • Finally, to drive faster decision making and more effective and efficient consumer focused strategies and execution in the marketplace, Management has completed an in-depth review of the Global Brands and Global Sales structures under the direction of recently appointed Executive Board members Eric Liedtke and Roland Auschel. This new organisational structure will take effect on Aug. 1, 2014.

Updated guidance
Taking these developments and initiatives into account, Management now expects a mid- to high-single-digit currency-neutral sales increase (previously: high-single-digit increase) for the full year 2014 and net income attributable to shareholders to be at a level of around €650 million (previously: €830 million to €930 million). In addition, given that there has been little relief in the currency markets, the significantly lower contribution projected from TaylorMade-Adidas Golf as well as higher investments in marketing, the Group’s Route 2015 targets are no longer achievable in the timeframe. This will be discussed in further detail as part of the Adidas Group’s half year financial results on Aug. 7, 2014.
 
Interesting stuff:

Firstly, poor retail sentiment and the slow liquidation of old inventory in the golf category across the globe will lead to a significantly more challenging top-line and margin development for TaylorMade-Adidas Golf than originally expected in the second half of 2014. To ensure the successful execution of our strategy to drive long-term margin improvements in the golf category, we will take further measures to reduce inventory in the marketplace in the second half of 2014. In addition, we will also begin a restructuring program at TaylorMade-Adidas Golf to align the organisation’s overhead to match lower expectations for the golf industry’s development.
Click to expand...
 
Ouch. I am kind of an idiot and even I see the dark clouds over the golf division.
 
Just reeks of hubris and poor planning to me.
 
"restructuring" is never good. What appears obvious to me is the constant pushing of new product into the market while having too much stuck on hand is killing them.
 
Poor liquidation of old inventory is something that stands out to me.
 
Maybe they can launch a new ad campaign where DJ can help get rid of all the old white gear?
 
ddec said:
that jumped out to me as well
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Six4three5 said:
Bingo. That's what stood out to me as well.
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Why hold on to excess old inventory? Especially with their ability to kill a line without hesitation (Jetspeed), figured they would release it for cheap.

However, I guess if you saturate the market with your own, bottom priced, product, your higher end product will be overlooked by the average consumer.
 
Wow. market saturation. bubble burst. seems like the new CEO at Taylormade has his work cut out for him. eesh.
 
#Cookie said:
"restructuring" is never good. What appears obvious to me is the constant pushing of new product into the market while having too much stuck on hand is killing them.
Click to expand...

Yup, and golf stores already paid for the merchandise so they are going to keep on shelves so they can sell it.
 
Sorry I did not send the article.I am at a swim meet and trying to watch my kids head bob up and down in the water.The interesting side note to this is that the former head guy at Taylor Made Golf/Adidas, Mark King was promoted to President of Adidas Group North America a few months ago.He was responsible for the relentless flow of product that has come out of Carlsbad. Now someone else has to pay the price for the clean up.
 
My impression is that it's not so much "too many releases", but rather the massive retail buy-in (remember what just happened to Dick's) that was due to the success of the previous lines coupled with products that weren't a fit for what people expect now. They went to the well with the same expectations too many times, and dropped inferior product out there while doing it. 2014 was supposed to be a pretty slow year for them, but they dropped and disappeared Jetspeed (inferior in today's environment) in a matter of months and then did the same with SLDRs (again, inferior in the sense of new technology) just a short while later. Huge misteps by both TM and their retail partners.

It's not releases. Other companies have released a bunch of stuff and done ok. Instead, it's a bunch of releases with massive buy-ins that were poor product lines.
 
Id love to know how much in excessive inventory they are stuck with at TM, let alone what the retailers are stuck with as well.

And I just don tthink a price drop will get peeps running into the stores to buy the garbage
 
I think Hawk just nailed it.
 
SLDR has inferior technology?
 
War Eagle said:
Why hold on to excess old inventory? Especially with their ability to kill a line without hesitation (Jetspeed), figured they would release it for cheap.

However, I guess if you saturate the market with your own, bottom priced, product, your higher end product will be overlooked by the average consumer.
Click to expand...

I would also add that the low and forward cg wasn't the best for the average joe. The used rack at Golfsmith had probably 50 SLDR or SLDR S drivers on it.
 
Vegan702 said:
SLDR has inferior technology?
Click to expand...


SLDRs does for how it was marketed. There is no progression there. Instead, it's a regression. No adjustability. Same head.
 
Vegan702 said:
SLDR has inferior technology?
Click to expand...

Hawk said:
SLDRs does for how it was marketed. There is no progression there. Instead, it's a regression. No adjustability. Same head.
Click to expand...

Yup. SLDRs is the same driver head. Different paint, and non adjustable. You can't possibly say that the S line is a step forward in any way, shape, or form.
 
I forgot about the "S" line.
 
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