TopGolf sinks most since 2020 on concern of slowdown

TOPGOLF Callaway Brands Corp tumbled by the most since October 2020 after the company cut its profit forecast for the year, signalling that interest in golf is cooling following a pandemic-fuelled surge.

Shares in the American company, which generates most of its revenue from golf equipment and apparel, plunged 13%, agencies reported.

TopGolf also tempered its annual projection for same-venue sales growth at its namesake chain of high-tech driving ranges, citing lower corporate sales expectations as companies curb spending.

“We worry about the company’s golf equipment segment, which enjoyed incredible demand since the pandemic as golf experienced a surge in popularity,” CFRA analyst Zachary Warring wrote in a note to clients, downgrading his recommendation on TopGolf to hold from “buy”.

Golf enjoyed a renaissance moment during the Covid-19 pandemic. Participation rose as Americans turned to the sport, which is played outside and naturally distanced.

The shift help spur Callaway Golf to buy the remainder of TopGolf Entertainment Group in late 2020, in a deal that valued the driving-range chain at about US$2bil (RM8.8bil).

The jump in interest was a boon for shares in golf equipment makers including TopGolf and Acushnet Holdings Corp.

TopGolf in June 2021 touched the highest level since 1997, while Acushnet notched a record in November 2021.

Peer Acushnet also fell on Wednesday. Earlier this month, the company reported first-quarter net sales and adjusted earnings per share that topped Wall Street expectations.

In another development, the PGA Tour is adding another South Carolina stop, with the Myrtle Beach Classic launching in 2024.

The tour and tournament organisers signed a four-year agreement in midweek, AFP reported.

The tournament, sponsored by Visit Myrtle Beach, will be played at the Dunes Golf and Beach Club.

Dates of the tournament will be announced as part of the full season schedule release. It will serve as an alternate event in the same week as a designated event, for which not all players qualify.

The winner will earn 300 FedExCup points as well as a share of a US$3.9mil (RM17.4mil) purse.

“We are thrilled to announce the debut of the Myrtle Beach Classic, an exciting new playing opportunity for our members in one of our country’s most recognised and visited destinations,” tour president Tyler Dennis said in a statement.

“With its incredible passion for golf, the Myrtle Beach community is a natural fit to bring this tournament to life.

“We look forward to partnering with Visit Myrtle Beach for a first-class tournament at a championship venue,” said Dennis.