Written By: Tony Covey
TaylorMade’s new CEO Ben Sharpe has his hands full. His might be the fullest hands in golf. And his feet…with former CEO Mark King off to adidas North America, Mr. Sharpe has some pretty big shoes to fill as well. It’s a safe bet that the new boss is having little trouble staying busy. His company is in need of a bit of restoration.
While it’s absolutely a stretch to say that the ship is sinking, the SS TaylorMade has taken on some water over the last few months. The company is now working to plug the holes. Fixing the ship is part of Mr. Sharpe’s job right now, which certainly explains why TaylorMade has been, metaphorically speaking, in dry dock, for the last couple of months or so.
I’m done with the boat analogies.
Even as its main competitor (Callaway) has announced new product (and I promise you there’s lots more to come), TaylorMade has remained quiet. By now we should be talking about the next SLDR driver and the next SpeedBlade iron.
Instead, it’s barely updated putters, a driving iron, and more doom and gloom than is probably warranted.
It is a time of great restraint at TaylorMade, and while only the deepest of insiders know for sure, I would imagine that right now is when the new business strategy is being prepped and polished for deployment.
Whether that’s simply a recharge, a reinvigoration, or a total reinvention of the brand remains to be seen. I suspect that Ben Sharpe is taking a very close look at the existing executive team and deciding which of the holdovers from the Mark King era fit within his vision.
TaylorMade must recalibrate.
Let’s take a look at some of the problems TaylorMade currently faces.
Too Much Gear: Over-saturation, excess inventory, a flooded channel, whatever you want to call it, there’s too much in the way of old product on store shelves right now. This isn’t news.
Conservatively TaylorMade is 10 driver models deep on store shelves right now, and that’s a problem.
Golfers Don’t Trust TaylorMade: Some consumers have lost faith in TaylorMade. Most right-minded don’t doubt the quality, but in a tight economy, how do you justify spending big money today, when history has shown time and time again, that simply waiting a few weeks can save you $50-$100?
Most of us believe that given enough time TaylorMade will slash prices, offer up an alternative (430), give us a new color option (R1 Black/SLDR White), or simply bring out a new model (JetSpeed/SLDR S).
TaylorMade has conditioned the consumer wait for something newer, better, different, or at least cheaper, and that’s a problem.
Retailers are Pissed Off: With frequent, early, and aggressive price drops coupled with policies like the now notorious Net Down, minimum order incentives, and demands over the allocation of floor space; as the #1 company in golf, TaylorMade gained a reputation for being heavy-handed with retailers, particularly smaller accounts.
Many of those guys are tired of being bullied. Retailers are angry, and quite frankly more than a couple are enjoying watching TaylorMade get its comeuppance.
The guys selling you gear are fed up with the heavy-handed approach and diminishing margins on TaylorMade sales. There’s a small rebellion of sorts, and that’s a problem.
Dick’s Problem is TaylorMade’s Problem: By now the struggles at Dick’s Sporting Goods are well-known. The company was TaylorMade’s biggest customer. Estimates say 60% of the company’s current inventory is TaylorMade, and it’s not selling like it used to.
As a result of the decline in their golf equipment business, Dick’s (TaylorMade’s #1 source of revenue) is scaling back their golf business in a big way. That too is a problem for TaylorMade.
Cost Cuts are Necessary: Finally, after several less than stellar financial results for the last several quarters, TaylorMade’s parent company, adidas, has drawn a line in the sand. TaylorMade’s costs need to be cut to the tune of $65-$80 million bucks.
Closing down Adams HQ in Plano, and laying off a couple hundred people is an unfortunate start, but it’s not nearly enough.
More money will need to come off the books, and that’s a problem for TaylorMade.
There are some Positives
Like most anything else, it’s not all bad. There are actually some real positives that TaylorMade can take from 2014.
Ignore the financials and step away from the negativity for a moment…it’s actually been a banner year for TaylorMade products.
SLDR is a fantastic driver. SpeedBlade is as good as it gets in the game-improvement space, and the SLDR iron is the company’s best in years. The new golf balls are excellent. Mini Driver has been a personal revelation, and the Tour Preferred wedge is solid (and let’s be honest, TaylorMade’s wedges haven’t been solid for a while now).
Even the super-niche UDI gained a bit more traction that I expected.
And as long as I’m being honest, while JetSpeed was an almost total debacle, I’m actually impressed by the decisiveness with which the company pulled the plug on it. Scrap it and don’t look back.
I also applaud the company for moving away from the campiness of RocketBallz and JetSpeed (even if they were fun), and taking a more straight-faced approach to the business while reinvigorating the previously neglected Tour Preferred franchise. Think what you will about the marketing, but TaylorMade has always been serious about golf. Speed Police notwithstanding, for a good part of 2014 they’ve acted like it.
It can build off that too.
So What Would You Do?
Put yourself in Ben Sharpe’s shoes for 24 hours. Obviously that’s not enough time to execute a comprehensive change in strategy (if it is, these CEOs really are grossly overpaid), but given the helm of TaylorMade golf for a single day, what one single change would you make to help put the company back on the right track?