Topgolf Callaway Brands noted headwinds in earnings for its fiscal third quarter while offering a roadmap for its anticipated split in the year ahead.

The company’s net revenue of $1.01 billion decreased 2.7% year-over-year, primarily driven by an 11.1% decrease in its Active Lifestyle unit. Still, that decrease was somewhat offset by 1.2% year-over-year revenue growth at Topgolf. Company leaders framed Q3 results in the context of difficult economic circumstances broadly.

“We are pleased to announce results that exceeded our expectations for Q3 amid a challenging macroeconomic backdrop,” said Chip Brewer, president and chief executive officer of Topgolf Callaway Brands. “Topgolf performed consistent with our revenue expectations and continued to show strong venue profitability despite the challenging sales environment.”

The combined Topgolf Callaway Brands is No. 527 in the Top 1000. The Top 1000 Database is Digital Commerce 360’s ranking of the largest North American online retailers by web sales. There, Topgolf Callaway falls under the Specialty category. Digital Commerce 360 projects that Topgolf Callaway’s total web sales will reach $146.00 million in 2024.

Topgolf Callaway Brands web sales by year

Topgolf Callaway updates on expected split with earnings

In September, company officials announced plans to split the two companies, Topgolf and Callaway, into separate entities. While that path is still being pursued, Brewer didn’t rule out a sale.

“We’re definitely fully engaged on the process of separation of Topgolf, and we believe that’ll maximize shareholder value,” he explained on the the Q3 earnings call. “We’re evaluating both spin and sale.”

If one of the companies is spun off into a separate entity, Brewer said that would happen mid-year in 2025.

Other highlights from the earnings call and report:

• Topgolf opened venues in Greensboro, North Carolina, and Des Moines, Iowa. The company expects to have 100 company-owned Topgolf locations by year’s end.
• Internationally, Topgolf opened two new venues, one in Jakarta, and one in Wuhan, China, for a total of seven franchise international venues.
• Topgolf expects to open five new entertainment centers in the United States in 2025.
• Callaway golf clubs are the No. 1 market share club brand in the U.S. as measured by Datatech.

As of the quarter’s end, Callaway had 57 stores, and direct-to-consumer now equals about 40% of the company’s business.

“The retail stores are high ROI investments and also drive brand growth and wholesale volumes in their markets,” Brewer stated.

Topgolf’s Sonic The Hedgehog game

In the meantime, Topgolf continues to partner with outside entities to generate interest in its products.

Sonic the Hedgehog debuted at Topgolf venues on Friday, Nov. 15. The promotion was timed with the official launch of the new game, Topgolf Sonic the Hedgehog, which will be exclusively available for play at Topgolf venues across the U.S.

Developed by Topgolf in partnership with Sega, the game is the first venture into the golf entertainment space for the Sonic the Hedgehog franchise. Brewer expressed excitement about the project.

“We just announced this cool new game in partnership with Sega, called Sonic the Hedgehog, and that is getting launched right ahead of their introduction of the movie,” he said. “And so, I played the game, it’s fantastic. It creates new energy, excitement, things to talk about, reasons to new visitors to visit, and also people come back again.”

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