Topgolf Callaway Brands (NYSE: MODG) on Aug. 7 closed down at $12.22 (from open of $14.36) following after its earnings report fell short of analysts’ expectations in Q2 2024, with revenue down 1.9% year on year to $1.16 billion. The golf entertainment company’s Q3 revenue guidance of $980 million also underwhelmed – 13.8 percent below analysts’ estimates.
MODG reported Q2 earnings of $62 million versus $117 in Q2 of 2023. Year-to-date, the company reported earnings of $68.6million versus $142.4 the first six months of 2023.
Revenue fot Topgolf entertainment venues in Q2 increased $20 million versus Q2 of ‘23 to $474 million. Year-to-date, Topgolf entertainment revenue came in at $879 million, a nearly five percent increase.
Perhaps of most concern to Wall Street, Topgolf same venue sales of minus eight percent were below expectations driven by softer-than-expected traffic as the business navigates the current cyclical macro challenges.
Meanwhile, MODG reported Q2 equipment sales fell eight percent to $414 million. Year-to-date equipment sales dropped five percent to $656 million.
The Aug. 7 drop Topgolf Callaway Brand’s stock price was no surprise as MODG, despite generally strong quarterly earnings resorts, has rarely been a Wall Street darling, much to the frustration of company President Chip Brewer, who said his company is “in the process’’ of conducting a full strategic review of Topgolf.
“As we look forward, we remain convinced that Topgolf is a high-quality business with significant future opportunity,’’ Brewer said. “It is transforming the game of golf, and we believe it will deliver substantial growth and financial returns over time.
“At the same time, we have been disappointed in our stock performance for some time, as well as the more recent same venue sales performance. As a result, we are in the process of conducting a full strategic review of Topgolf. This review includes the assessment of organic strategies to return Topgolf to profitable same-venue sales growth, as well as inorganic alternatives, including a potential spin of Topgolf.
“Our strategic review of Topgolf is being conducted with the help of outside advisors and is focused on maximizing long-term shareholder value. We are active in this work at present and expect to complete our strategic review of Topgolf expeditiously.’’