Topgolf Acquisition Bolsters Callaway Golf, the No. 2 Fastest-Growing Retailer

Callaway Golf is buying trendy driving-range outfit Topgolf International in an all-stock transaction valued at $2 billion — giving the Carlsbad, Calif.-based company control of the party-golf attraction that’s credited with luring new players to the game. The deal was announced Tuesday. Callaway already owns 14 percent of Topgolf. It first invested in the company in 2006. The combination layers a flashy, golf-related entertainment business on top of Callaway's core golf equipment and apparel brands. A natural synergy that presents growth opportunities for both parties.

The acquisition of Topgolf is the latest in a series of moves by Callaway that have positioned it for future success. In fact, according to Total Retail's latest research report, Top 100 Fastest-Growing Retailers, a year-over-year comparison of 2019 fiscal year net sales vs. 2018 fiscal year net sales for 160-plus publicly traded retailers, Callaway Golf is already headed in that direction. The premium golf equipment and active lifestyle company with a portfolio of global brands, including Callaway Golf, Odyssey, OGIO, TravisMathew, and Jack Wolfskin, ranks No. 2 on the list, with net sales in its 2019 fiscal year growing 36.87 percent, totaling $1.7 billion.

With Topgolf now in the fold, Callaway is looking to double-down on its efforts to introduce the game of golf to a new — and younger — customer base. And with interest in golf rising, so too will sales of its equipment, apparel and accessories.

"Topgolf had 23 million visitors to its venues in 2019," said Chip Brewer, Callaway Golf's CEO, in a conference call with investors. “Half of those identify themselves as golfers. The overlap there — the ability to promote and sell products to those customers through the venues — is quite tangible.”

Product Development, Innovation Drive Sales Gains

Callaway has invested in product development and product innovation to spur its recent sales gains, and is looking to take the next step in its growth through acquisition. But first on the product itself. Driving product development is Callaway Golf’s use of technology in the design process, particularly artificial intelligence (AI).

“We introduced AI in golf equipment in 2019, and now we’ve significantly advanced our understanding and application of AI to deliver distance that defies convention,” said Dr. Alan Hocknell, senior vice president of research and development (R&D) at Callaway Golf, in a company press release. “We’re confident that we will continue to push the boundaries in this new arena of club design.”

As for growth through acquisition, Callaway has been busy — its purchase of Topgolf being the latest example. In January 2019, Callaway purchased active lifestyle brand Jack Wolfskin, reflecting the golf brand's intention to be more than just the leader in the golf equipment market. Along with the TravisMathew brand, which continues to grow at a double-digit rate, Callaway Golf is diversifying its business beyond just golf equipment. And now with Topgolf part of the company, Callaway has made its entrance into the entertainment/experience arena.

This brings us back to our Top 100 Fastest-Growing Retailers report. The top-ranked companies in this report are willing and able to adapt to shifting consumer behaviors and transform their businesses to capitalize on market demand and opportunities. Callaway Golf has certainly taken that tact with its acquisition of Topgolf.

This report is a testament to the value retailers are realizing by digitally transforming their businesses to best serve today’s consumers. It includes a data table detailing the 2019 fiscal year numbers for the top 100 retailers, as well as profiles of the top 10 companies on the list. The profiles offer a glimpse into how leading organizations in the industry have managed to grow sales through a variety of tactics, from international expansion to loyalty programs, to in-store investments and customer experience upgrades. These and other strategies could be right for your business to implement, helping to drive bottom line growth in 2020 and beyond.

Access the complimentary report here!