TaylorMade Golf - A Struggle At The Top?

[DawgDaddy]

Great article Josh, I do hear all of the gloom & doom reports about the state of golf regularly and have wondered about the ripple effect it is having throughout the industry.

I really hope TMaG can turn it back around or at least stop the leaking because as you said, “frankly golf needs more companies producing high quality equipment, not less.”

 

[JB]

​The problem is so simple..... they r pumping out product and attempting to diversify faster than they can sell.... simple economics.

If you read through the article linked in the 1st post, it is less about release schedules and more about inventory of those releases. Quite a few companies have had just as many releases over the last 36 months without having these issues.

Good article. I am not smart enough for the answers, but can say ever since the Rocketballz introduction their releases just haven't hit home for me. I still play the R9 driver and have added the mini driver and 3w HL, but everything else has just been blah.

SLDR has done well for them. Quite well actually, however the fairways and hybrids have not reached lofty projections in my opinion. JetSpeed was a real tough one in many ways from a retail stand point because it was killed so fast too. SLDRs is extremely interesting because from the outside looking in, its quite a step back from the company that has been quite innovative. Taking the same head and removing adjustability and undercutting the premium driver price.

With JetSpeed all but gone from their message, they do now have 2 drivers to focus on (albeit the same head) with 2 different price points. Hopefully they stay there for the remainder of 2014 and we see what the future holds. All the while letting retailers catch up on Stage 2, R1, etc.

 

[OITW]

JB great editorial. I agree 100% that it is an inventory management issue.

What were the TMaG comps for 2013?

It is very difficult to sustain double digit comps year after year, also to plan for double digit comps can get risky.

Looking at the previous success that they had, I think both TMaG and their retail partners misjudged the demand on product in the market and possibly both planned another increase (which would have been a big mistake) or flat comps in the new lines which still would have been tough hit as well. Since you're trying to plan an increase on top of a combined 52% increase from the two previous years.

I know companies will have a contract in regards to markdowns and concessions, but I wonder with the poor performance of the Jetspeed if TMaGs retail partners went back and asked for more markdown money/concessions due to the poor performance, which would have been another hit to TMaG, if they gave back more money, to be a good partner.

 

[SaffaClint]

Haha! This is a direct result of releasing too many products. So they have who knows how much old stock they can't sell, why's that, could it be because it's not the longest or straightest etc that they've developed anymore?? Lol. I have zero pity for them.

 

[JB]

JB great editorial. I agree 100% that it is an inventory management issue.

What were the TMaG comps for 2013?

It is very difficult to sustain double digit comps year after year, also to plan for double digit comps can get risky.

Looking at the previous success that they had, I think both TMaG and their retail partners misjudged the demand on product in the market and possibly both planned another increase (which would have been a big mistake) or flat comps in the new lines which still would have been tough hit as well. Since you're trying to plan an increase on top of a combined 52% increase from the two previous years.

I know companies will have a contract in regards to markdowns and concessions, but I wonder with the poor performance of the Jetspeed if TMaGs retail partners went back and asked for more markdown money/concessions due to the poor performance, which would have been another hit to TMaG, if they gave back more money, to be a good partner.

They were quite strong and at the time, then CEO Mark King, had this to say after nearly a 300 million 3rd quarter.

“Strong equipment sales combined with our growth in the footwear and apparel categories have us on track to surpass the unprecedented $2 billion sales barrier by 2015,” said King. “We believe the industry will rebound in 2014 from the 10 percent YTD drop in the U.S. metalwood market size and 6 percent drop in U.S. rounds played that have impacted growth in 2013.”

 

[OITW]

Hmmm, that is interesting. Obviously the issue just isn't with clubs, since "they are down double digit comps for the second straight quarter". I think based on posts here it is being attributed to the metal woods, but I wonder what other segments of the business are not performing as they had in the past.

 

[Vegan702]

Market saturation? With reports that new people aren't coming into the game and people are leaving, maybe less and less people are buying new equipment and therefore all these equipment companies should be cutting back on the amount of product produced for each release. I have only been golfing about 5yrs now and I don't anything made over that time period would have drastically changed my game from my first purchase to my current purchases if they were purchased at different times. So maybe more and more people who are in the game feel the same way and have cut back on buying their game and focusing on other areas. TM woes could just be foreshadowing whats coming for other companies soon?

 

[JB]

Market saturation? With reports that new people aren't coming into the game and people are leaving, maybe less and less people are buying new equipment and therefore all these equipment companies should be cutting back on the amount of product produced for each release. I have only been golfing about 5yrs now and I don't anything made over that time period would have drastically changed my game from my first purchase to my current purchases if they were purchased at different times. So maybe more and more people who are in the game feel the same way and have cut back on buying their game and focusing on other areas. TM woes could just be foreshadowing whats coming for other companies soon?

I think that is the million dollar question, but so far this year, while says are where they are, the other larger companies do not appear to have this same issue. Then again, none of them forecasted what Mark King did for 2015.

I think a few years ago Callaway was in a similar spot for much different reasons. Had to cut millions and many of the posts on THP, thought they were done. They made the restructuring and have since rebounded quite well. Based on simply my math and projections, TaylorMade will have to cut more than they did to get lean and mean again.

 

[annsguy]

This will be super interesting to watch as both Taylor Made makes cuts then Adidas either agrees or cuts deeper.Made all the more interesting since Mark King will have the largest pair of scissors as head of Adidas North America.Based on his 2015 forecast he must have been expecting the rest of the industry to simply roll over like the Russians were coming to town.Also Adidas being Euro loves them some Olympics and I think they want to play up Taylor Made big time in Rio with golf being played at the games for the first time.I guess that can still happen but one assumes in a smaller way.

I think that is the million dollar question, but so far this year, while says are where they are, the other larger companies do not appear to have this same issue. Then again, none of them forecasted what Mark King did for 2015.

I think a few years ago Callaway was in a similar spot for much different reasons. Had to cut millions and many of the posts on THP, thought they were done. They made the restructuring and have since rebounded quite well. Based on simply my math and projections, TaylorMade will have to cut more than they did to get lean and mean again.

 

[Playdough]

I think that is the million dollar question, but so far this year, while says are where they are, the other larger companies do not appear to have this same issue. Then again, none of them forecasted what Mark King did for 2015.

I think a few years ago Callaway was in a similar spot for much different reasons. Had to cut millions and many of the posts on THP, thought they were done. They made the restructuring and have since rebounded quite well. Based on simply my math and projections, TaylorMade will have to cut more than they did to get lean and mean again.

Do you think that the growth of Callaway again has much to with the people leading it now than it did the products? Don't get me wrong, the products are what matters, but their marketing has been spot on for a year and half now. And we know that plays a huge roll for uneducated consumer. They buy what they are told is the best no matter who is telling them its the best. But when Cally tells me the XHot hybrid is "Ridonkulong" thats catchy and I want to explore it. When TM tells me I'm playing the wrong loft and have been for years, that doesn't catch me and say explore it. So i wonder if partly loses in the Marketing department at TM are hurting them as well. Didn't Cally hire Harry away from TM marketing along with a couple of his people? Didnt a one of two of the R&D guys jump ship from TM and end up at Cally or am I thinking of the one who left TM and went to Cobra?

 

[Playdough]

This will be super interesting to watch as both Taylor Made makes cuts then Adidas either agrees or cuts deeper.Made all the more interesting since Mark King will have the largest pair of scissors as head of Adidas North America.Based on his 2015 forecast he must have been expecting the rest of the industry to simply roll over like the Russians were coming to town.Also Adidas being Euro loves them some Olympics and I think they want to play up Taylor Made big time in Rio with golf being played at the games for the first time.I guess that can still happen but one assumes in a smaller way.

Adidas is soft goods and soft goods are huge business right now. Golf is a very small section of what they do. And soft goods are high margin products. Look at Nike, Nike Golf soft goods basically keep the hard goods division floating. Will adidas force cuts at TM? Probably. But I can also see the move of Mark King from TM to AdidasNA as stratigic move. AdidasNA can look to Mark as the expect on where and what fat needs cut and then make those cuts. Mark King didn't leave TM because he was bored, he was probably asked to move to get a better high level, outsider view of what is wrong with TM.

 

[JB]

Do you think that the growth of Callaway again has much to with the people leading it now than it did the products? Don't get me wrong, the products are what matters, but their marketing has been spot on for a year and half now. And we know that plays a huge roll for uneducated consumer. They buy what they are told is the best no matter who is telling them its the best. But when Cally tells me the XHot hybrid is "Ridonkulong" thats catchy and I want to explore it. When TM tells me I'm playing the wrong loft and have been for years, that doesn't catch me and say explore it. So i wonder if partly loses in the Marketing department at TM are hurting them as well. Didn't Cally hire Harry away from TM marketing along with a couple of his people? Didnt a one of two of the R&D guys jump ship from TM and end up at Cally or am I thinking of the one who left TM and went to Cobra?

Possibly. I think it trickles down from the top at many companies. Chip Brewer has openly said that he believes the products have to come first and marketing great products is the best philosophy out there. Taking the "reigns" off a R&D staff is a great thing and we have seen what has come out of that product wise in terms of innovation. I think we are seeing that across the board in the golf industry and while I believe that some companies are doing it better than others, it's you guys that determine how good they are really doing as it pertains to success. To answer the question Harry Arnett did go to Callaway and become their CMO and Tom Olavsky, did leave TaylorMade and go to Cobra to lead R&D.

I don't want to downplay the equipment that has come out of TaylorMade Golf. While I have been critical of the line this year for me (and many amateurs like me), everybody that has been a member at THP for a number of years knows that I played their metal woods for so many years and am quite fond of many of their lines. I do think their shift the last couple of years was not something that benefits the majority and I struggle with that a bit, but they always had full lines to benefit so many golfers. This was a departure from that to an extent. It was SLDR with adjustability or a technology they panned (long and light) with the same style head minus some adjustability in JetSpeed. That hurt. Then add retailers full of previous lines due to inflated forecasts (in my opinion) and it is a recipe for disaster. Right around the rules change, I saw something similar with Titleist wedges (to a much lesser extent) and have seen it in other industries as well.

The question is, when was this known. People I have spoken to have told me that there are many that saw the writing on the wall and because they moved up SLDR launch so much, 2014 was going to be a year where we saw a slower approach to let retailers catch up with inventory issues. Just a month or so after that, SLDR S launched (which was a regression in technology, but hit a price point that was needed since JetSpeed had been heavily discounted).

Im concerned for friends we have at the company, and add to that a concern for the industry, although I do not believe the doom and gloom reports that have been coming out and look at them in a way that is a bit different because quite a few numbers are up and/or have been met year or year.

The biggest question is what will it take to right the ship? We are watching growth from other companies in this decline, although steady growth rather than a giant spark, which I believe is more sustainable. We have also seen a driver on the shelves maintain solid sales at #1 at a $400 price point for a year now, all the while having solid sales for multiple lines from other companies. That says release frequency is not the issue, but retail needs to be a partner and that goes for both sides.

 

[arydolphin]

Do you think that the growth of Callaway again has much to with the people leading it now than it did the products? Don't get me wrong, the products are what matters, but their marketing has been spot on for a year and half now. And we know that plays a huge roll for uneducated consumer. They buy what they are told is the best no matter who is telling them its the best. But when Cally tells me the XHot hybrid is "Ridonkulong" thats catchy and I want to explore it. When TM tells me I'm playing the wrong loft and have been for years, that doesn't catch me and say explore it. So i wonder if partly loses in the Marketing department at TM are hurting them as well. Didn't Cally hire Harry away from TM marketing along with a couple of his people? Didnt a one of two of the R&D guys jump ship from TM and end up at Cally or am I thinking of the one who left TM and went to Cobra?

Harry Arnett was at Ashworth (part of TMaG) prior to joining Callaway, I think. The big R&D guy that left TMaG was Tom Olsavsky who went to Cobra.

 

[JB]

Harry Arnett was at Ashworth (part of TMaG) prior to joining Callaway, I think. The big R&D guy that left TMaG was Tom Olsavsky who went to Cobra.

Actually Harry Arnett worked with Ashworth, adidas Golf and TaylorMade equipment and golf balls.

 

[tequila4kapp]

How have they been able to sell the #1 driver, a nearly $400 item, especially consider it isn't especially forgiving for the average golfer? Maybe the answer to that question is part of their bigger solution.

 

[Paladin]

How have they been able to sell the #1 driver, a nearly $400 item, especially consider it isn't especially forgiving for the average golfer? Maybe the answer to that question is part of their bigger solution.

Tour presence, reputation, decent marketing (as much as JetSpeed's marketing was bad, I always felt like the SLDR's whiteboard marketing was simple and effectively explained the product), combined with the fact that a good shot on the screws with the SLDR is utterly addictive.

 

[annsguy]

I have been in the soft goods business most of adult life. Adidas apparel and footwear are not hot in many channels.Perhaps some of the other companies they own are what you referring to.For that matter soft goods outside of yoga apparel is terrible in most parts of this country. Perhaps Adidas has some strength in golf, it is where I know the least. They stink in tech running and in cheaper run styles. Name one of their good basketball shoes.The apparel is nice but is a distant seller to Nike where they compete.In this country Under Armour gives them fits.
I just think King got promoted for the good numbers he showed and the plan looked good.Sadly the back end of his plan unfolded like a bad dream.But he was in a safe landing spot. Good for him.

 

[JB]

I have been in the soft goods business most of adult life. Adidas apparel and footwear are not hot in many channels.Perhaps some of the other companies they own are what you referring to.For that matter soft goods outside of yoga apparel is terrible in most parts of this country. Perhaps Adidas has some strength in golf, it is where I know the least. They stink in tech running and in cheaper run styles. Name one of their good basketball shoes.The apparel is nice but is a distant seller to Nike where they compete.In this country Under Armour gives them fits.
I just think King got promoted for the good numbers he showed and the plan looked good.Sadly the back end of his plan unfolded like a bad dream.But he was in a safe landing spot. Good for him.

I think in golf it is a bit different where they have flourished in soft goods. In an area where there was a single giant for decades, adidas Golf has come in and done amazingly well.

 

[annsguy]

I know I have been on the receiving end of Big Box Sporting Goods stores asking for more markdown support after support had been already agreed upon.They frankly do not want to ask but when it is as bad as this appears with JetSpeed then it is ask or heads will roll.

JB great editorial. I agree 100% that it is an inventory management issues

What were the TMaG comps for 2013?

It is very difficult to sustain double digit comps year after year, also to plan for double digit comps can get risky.

Looking at the previous success that they had, I think both TMaG and their retail partners misjudged the demand on product in the market and possibly both planned another increase (which would have been a big mistake) or flat comps in the new lines which still would have been tough hit as well. Since you're trying to plan an increase on top of a combined 52% increase from the two previous years.

I know companies will have a contract in regards to markdowns and concessions, but I wonder with the poor performance of the Jetspeed if TMaGs retail partners went back and asked for more markdown money/concessions due to the poor performance, which would have been another hit to TMaG, if they gave back more money, to be a good partner.

 

[Brianbigoats]

Tour presence, reputation, decent marketing (as much as JetSpeed's marketing was bad, I always felt like the SLDR's whiteboard marketing was simple and effectively explained the product), combined with the fact that a good shot on the screws with the SLDR is utterly addictive.

Those shots on the screws with the SLDR keep you coming back

 

[OITW]

I know I have been on the receiving end of Big Box Sporting Goods stores asking for more markdown support after support had been already agreed upon.They frankly do not want to ask but when it is as bad as this appears with JetSpeed then it is ask or heads will roll.

I think we've all been focusing on the Jetspeed line and equipment in general, but my second comment based on JBs article if they've seen double digit decreases through the first two quarters with the size of their total golf business I wonder where else they are seeing the hit whether it be footwear and apparel not just equipment.

 

[annsguy]

JB,Your comments are noted. I have always stayed out of the golf side of the business because I love the game too much and figured it would be a quick way to unemployment. As I have mentioned before I knew someone at TMAG who was sales manager for footwear and apparel. He was only there about a year and a half and loved the pace the company ran at. He noted that the business although very good was getting harder because the salesmen who use to walk in with four bags of samples on the rack now had ten bags.And the job was to sell a lot more. Same with footwear.No one wants only brand in the closet. I guess that too was a part of the overall plan King had.

I think in golf it is a bit different where they have flourished in soft goods. In an area where there was a single giant for decades, adidas Golf has come in and done amazingly well.

 

[salisboss]

This is purely speculative. Its still selling at 399.00 over a year later. This tells me its moving on store shelves.

It may be moving off the initial shelf but if at least at the golfsmith I was at two days ago 60% of the used rack were sldr and sldr s.

 

[JB]

JB,Your comments are noted. I have always stayed out of the golf side of the business because I love the game too much and figured it would be a quick way to unemployment. As I have mentioned before I knew someone at TMAG who was sales manager for footwear and apparel. He was only there about a year and a half and loved the pace the company ran at. He noted that the business although very good was getting harder because the salesmen who use to walk in with four bags of samples on the rack now had ten bags.And the job was to sell a lot more. Same with footwear.No one wants only brand in the closet. I guess that too was a part of the overall plan King had.

I completely understand wanting to stay out of it. Working in golf, does not mean playing more golf.

 

[annsguy]

You are right I am sure but I was always worried about the complete opposite.It worked out fine.I will say this story has taken me away from the more positive things going on in the that you and your team write on so well.I for one am excited to see what Bridgestone, Wilson Staff,Cleveland and others are working on.Perhaps their window of opportunity is now open.

I completely understand wanting to stay out of it. Working in golf, does not mean playing more golf.