Today the NY Post has an article on the current status on the Struggling TaylorMade’s business. The TaylorMade brand and business is currently owned by Adidas, and has been trying to sell the business for a period of time now. This process has been unsuccessful, and from today’s article, it looks like the value of the business is declining fast including the potential sale price.
In the not to distant past, TaylorMade was on top of the golf equipment world and profitable. The company owned the Driver market which is very lucrative, and seemed to be impenetrable as the #1 Driver, but fast forward a few years and things look much different. Competition has heated up, golf is declining and the golf retail market is struggling. Losing between $75 and $100 million is a lot of bleeding to stop, and requires an owner willing to make some tough decisions and straighten out the cost structure and future product roadmap.
TaylorMade, and the much smaller Adams and Ashworth brands — is losing between $75 million and $100 million a year, according to sources close to recent deal talks.
It sounds like the current revenue run rate is about $500 million which is a far cry from 2013 when the business was doing upwards of $1.7 billion. Callaway has done a very good job of turning their business around, and Chip Brewer has had great success driving success as a golf equipment manufacturer. The new Epic driver could be a disruptive force towards TayloreMade’s position as the number #1 driver on Tour.
TaylorMade also introduced new 2017 M1 and M2 drivers, but these are improvements of existing models and are not seen as great innovations.
The product road map seems to be struggling, and this can drastically slow down revenue because the golf equipment business is based upon the next best thing, year after year. If the products do not keep up with new capabilities that are “new” to the market, then the company can be subject to fast revenue loss. There aren’t many moats or barriers to market in the golf equipment business, and the industry is changing quickly.
In March Sports Authority, a major TaylorMade customer, went bankrupt; Nike in August announced it was exiting golf clubs, balls and bags, eliminating it as a buyer of assets including TaylorMade; then in September retailer Golfsmith filed for bankruptcy.
The golf retail industry is in turmoil with recent bankruptcies and Nike exiting the golf equipment business. This can have an impact of the viability of the TaylorMade business going forward if a few of the larger retail distribution companies are exiting the business. It’s a difficult time to be trying to divest a golf equipment manufacturer. I would envision that the landscape will eventually settle down and become more stable once it right-sizes but until then, TaylorMade could be in trouble going forward.