Saying that it’s “tough to predict’’ the exact impact the impact of tariffs, Topgolf Callaway Brands (MODG) President Chip Brewer told Wall Street analysts that assuming current rates of approximately 10 percent, for all countries of origin other than Mexico, Canada and China, this year’s unmitigated impact on his company would be approximately $25 million – a $20 million increase from the number he gave in Q4 of 2024.
“Looking forward, if these are the final rates,’’ Brewer said during Topgolf Callaway Brands’ Q1 2025 earnings call, “we believe we will be able to mitigate some portion by further optimizing operations and accelerating cost reduction and margin programs.
“We then believe we will have the ability to pass the balance on with only a minor impact to demand. We believe we are benefiting from having been proactive on cost and margin initiatives over the last twelve months and then accelerating them further recently, as well as from the scale, brand strength and capabilities of our organization.’’
Brewer added the company will be watching the economy and resulting demand side closely, “as the risk of a further slowing of consumer activity has certainly gone up.’’
“And to be clear, my primary concern is on the demand side, and that outcome is unknowable at this point. Fortunately, it’s worth reminding ourselves that golf equipment has not historically been sensitive to mild recessions.’’
Topgolf Callaway Brands reported Q1 revenue of $1,092 billion, a 4.5 percent drop versus Q1 of 2024, but two percent more than Wall Street expectations. The company reported earnings of $2.1 million vs. $6.5 million in Q1 of ‘24, but its 11 cents per share beat Wall Street projections of minus $0.06.
Topgolf’s revenue segment in Q1 of ‘25 dropped $29.1 million vs Q1 of ‘24 to $393.7 million. Same venue sales fell 12 percent, which the company called “in line with expectations.’’
Segment operating income decreased $14.8 million to a loss of $11.9 million.
On the golf equipment side, Topgolf Callaway Brands reported Q1 2025 revenue decreased $6.2 million to $443.7 million primarily due to unfavorable foreign currency rates, as well as a “more competitive launch environment,’’ as all four OEM’s launched full new wood lineups in the first quarter, as expected.
Golf equipment segment operating income in Q1 2025 increased $19.5 million to $101.6 million, which the company said was primarily driven by improved gross margin performance, the favorable impact of cost savings initiatives and a lease termination incentive for the company’s subsidiary.
Topgolf Callaways Brands closed May 12 at $7.90 per share, its highest closing price since this past Feb. 6, when it closed at $8 per share.
