Callaway CEO Resigns – What Will The Future Hold For The Brand?

Can Callaway Be King Of The Hill Again?

In the past couple days we learned that the Callaway CEO (George Fellows) resigned from his position and was replaced by what they are calling their new interim CEO (Tony Thornley).  No real shock honestly…the company has been in trouble for quite some time from a financial standpoint.  And I think the “interim” term should not be ignored in this particular instance.  I think it contains some possible foreshadowing regarding his future and the companies.

But before we get to all that….

Remember the days when Callaway released clubs like the Big Bertha, Great Big Bertha & Biggest Big Bertha drivers?  And who could forget the Callaway Hawkeye Tungsten irons which sold like hotcakes at a whopping $1500 a set! These products and their launches forever changed the ways golf products were sold.  Callaway was king of the hill at that time. Everything they launched turned to gold.

Times sure have changed. Not only is Taylormade now king of the hill but the economy has made it so the $1500 iron set purchase is a thing of the past.  So what went wrong and why did things change?  Well you could say that “Jump The Shark” moment for the brand began with the death of Ely Callaway. The profit numbers and market share numbers stayed pretty steady for a few years after because of what he built but have been on a steady decline since.

And even more recently I feel the area that hurt Callaway the most was simply a lack of innovation, sticking with a technology too long and being out of touch with today’s golf consumer.   I will give you an example:

Sticking With A Technology Too Long

The unfortunate piece of this topic is that I honestly feel that Callaway’s current product line is the strongest line of products in its history.  You might be shocked to hear that…especially when thinking of some of those previous clubs I spoke about them launching back in the 90’s.  And that is the unfortunate part..consumers don’t get to see what we do when we test their products.  And what we see is that Callaway has some great performing drivers, irons and wedges in their stable.  So why doesn’t it translate to sales and market share growth?

Well my honest opinion and one I have spoken to multiple Callaway employees about is the fact they stuck with the carbon fiber driver technology way too long.  Remember the Callaway C4 driver?  It was a complete bust! But they stuck with the technology and have continued to improve on it year after year.  So much so…that their past few carbon fiber drivers are some of the best performing drivers we have tested with that same technology.

Sounds great right…

Problem is no matter how good their new drivers are…they look the same as the old ones to the average golfer.  So when they see that new Callaway driver on the rack in their store…it looks the same as just about every other driver they have launched for the past 10 years.  Result:  the golfer walks right by it and sees that flashy whit thing every body has been talking about.  And they have not been talking about it because its longer or straighter which should be the reason golfers are flocking to it.  Golf consumers are a finnicky bunch.  And drivers….well drive sales for the rest of a line for the most part.  Golfers love to hear those 15 yard increase claims every year…as other sports might put it, “They put asses in the stands.”  Drivers put golfers in the stores.

What Will Change At Callaway?

With a net loss of around $55 million dollars this quarter the new “Interim CEO” has his work cut out for him.  But honestly I think he’s just there to cut the fat.  And get Callaway down to a lean, mean, well oiled machine.  Which unfortunately for Callaway some other golf companies saw well before 2011.  So is it too little too late for the Callaway brand?  I don’t think so.  In my opinion it wouldn’t take much to turn this ship around.  And if you ever wanted to buy some Callaway stock (ELY) yesterday might have been a good time.  So will the current CEO see what so many others in the business see as obvious or will he only be an axe man…and ignore the product line…we will have to wait and see.

Some Info About OLD & NEW CEO

• George Fellows Ex-CEO – gave personal reasons for leaving…”The personal demands of cross country commuting and other demands on my personal life and family have led me to conclude now is the right time for me to make this change.”
• Tony Thornley New Interim CEO – Mr. Thornley, 65, joined the Board of Callaway Golf in 2004…He served as Qualcomm’s Chief Financial Officer from 1994 to 2002…”While it is clear that it was the global economic recession that derailed our record sales and earnings pace, it is also clear that our business is not keeping pace with the industry recovery,” said Mr. Thornley….”It is therefore necessary for the company to take immediate and aggressive actions…reinvesting a portion of the cost savings in key marketing initiatives.” says Mr. Thornley.

Your Thoughts?

Got an opinion on Callaway’s current product line?  Or something you feel about the change at CEO? {START THE DISCUSSION}