Adidas Looking to Sell TaylorMade?

**mvmac** · August 7, 2015

I've heard that Ashworth will likely be sold, as well as Adams (to Dick's) but haven't heard anything about TaylorMade.

http://www.geoffshackelford.com/homepage/2015/8/6/adidas-looking-at-selling-off-some-or-all-golf-assets.html

Bloomberg's Aaron Ricadela reports on the adidas conference all where CEO Herbert Hainer revealed the retention of Guggenheim Partners to consider selling off Adams,Ashworth and perhaps even the Taylor Made brands.

And of course, just as with Dick's Sporting Goods, it's all golf's fault, not the decision to introduce three drivers in a year or overall oversaturation of the market.

Golf is waning in popularity in the U.S. and Adidas now forecasts a full-year sales decline for the business, excluding currency shifts. The company previously expected “significantly improved top-line development” for the unit, which accounted for 913 million euros in sales last year, 6.2 percent of Adidas’s total.

Fred Speirs, an analyst at UBS, said TaylorMade could be worth 80 percent to 100 percent of its 2015 sales on an enterprise value basis.

This Emma Thomasson and Jörn Poltz Reuters story also uses what is looking like boilerplate language these days under the headline of, "Adidas considers giving up golf as cycling booms."

After peaking around 2000 when Tiger Woods was in his prime, the number of U.S. golfers has been steadily falling as fewer young people take up the sport and as busy professionals switch to cycling rather than spending the best part of a day playing 18 holes.

Adidas bought the TaylorMade brand in 1997 along with Salomon, developing it into the world's biggest golf supplier. It acquired the Ashworth brand in 2008 for $72.8 million and the Adams brand for $70 million four years later.

Investors have criticised Adidas for responding too slowly to the declining popularity of the sport, flooding the market with new products that it then had to discount heavily.

Actually, the company pushed for profits and the third driver was released to flesh a few more bucks, so this one isn't really a golf problem. We know this because Adidas admitted as much on multiple occasions (here and here).

Also, though golf is to blame, the story did include this paraphrased admission from the CEO.

Chief Executive Herbert Hainer admitted that two new golf clubs - the R15 and the AeroBurner drivers - had not sold well and competitors had been raising their game, but said he had high hopes for another new club which it will be launching soon.

**Mr. Desmond** · August 7, 2015

I don't think it was the number of driver models introduced, but the inventory of those drivers, fairways, etc. they produced that caused the crash.

The news is not that surprising.

Perhaps TM should copy Callaway and learn to segment the market and produce less inventory.

**Dave2512** · August 7, 2015

Never understood their flooding the market model. Sometimes with little change from whatever the new equipment was replacing. If you a buy a new TM product before the year ends they will be selling the "new" version telling you it's 15 yards longer.

**MrDC** · August 7, 2015

The used driver bin at my local shop has about a dozen SLDR's, by far the most, that thing was a big turd and had to hurt them.

But I use a JetSpeed driver and love it, so they make some good, some bad.

I think generally speaking though, TM is not a very popular brand anymore.

**newtogolf** · August 7, 2015

It never made sense for Adidas to be in the golf business, they are a shoe and apparel company first and foremost. When King was promoted out of TM and made President of Adidas North America it indicated that Adidas wasn't committed to TM and Adams long term. TM tried to capitalize on their RocketBallz success and did well until JetSpeed (which was a complete business failure for TM).

There are rumors within the industry that Nike is potentially interested in TM but it would have to be at a steep discount. Nike does well with clothing and shoes but still lacks a real presence on the Tour with their clubs and golf balls. TM still has good market share with drivers, woods and hybrids and Nike does well with their forged irons so it's a good fit.

Adams has been pillaged of all their IP and at this point they have lost their edge in hybrids so it's a perfect business to dump on Dick's Sporting Goods (where brands go to die). Ashworth hasn't done poorly so it will be interesting to see where they end up.

**deronsizemore** · August 7, 2015

Quote:

Chief Executive Herbert Hainer admitted that two new golf clubs - the R15 and the AeroBurner drivers - had not sold well and competitors had been raising their game, but said he had high hopes for another new club which it will be launching soon.

Seems like they continually release multiple drivers per year. Their most recent line of drivers isn't selling well and interest in golf is declining and so are their sales numbers so the solution they're going with is to release a new club soon?

**DeadMan** · August 8, 2015

My bag is mostly TaylorMade, but they've really shot themselves in the foot with their product releases. I mean, just compare them to Titleist, which releases new clubs pretty much every other year. I bought my irons about 6-8 months after they came out, but I got a huge discount since TM had already released another iron set (or two). You could probably buy last year's drivers for a good $200 off at this point. Not a great business model.

That said, I find it hard to believe that Adidas would spin off TaylorMade. They have a lot of high profile European golfers (Sergio, Justin Rose, for example) that they sponsor. I think that's probably worth quite a bit to them.

**Natural Patrick** · August 8, 2015

The used driver bin at my local shop has about a dozen SLDR's, by far the most, that thing was a big turd and had to hurt them.

But I use a JetSpeed driver and love it, so they make some good, some bad.

I think generally speaking though, TM is not a very popular brand anymore.

Interesting because the people that I know, that play TM drivers. All say that the JetSpeed driver is the biggest Turd that TM has ever made. I have not heard that many complaints about the SLDR driver.

**Dave2512** · August 8, 2015

I don't know one person that like the SLDR. My step-dad is a TM guy. He rushed out to buy the SLDR and he couldn't hit it. Probably more him than the club but my impression it it's not very forgiving. Some people just have to have the "it" gear. When I carry it I do well with my GEEK FS3 it cost all of $99. I tried to give him one, I have two, he wouldn't take it.

**Duff McGee** · August 8, 2015

I love the RSi1 irons I just bought. LOVE.

**Divotmaker77** · August 9, 2015

TM's bubble was bound to burst at some point. Never questioned their marketing as they are incredible at the BS they spew out about their product launches, but the new launches every 3 months or so was bound to catch up to them sooner or later. I was a TM guy at one point, but I have moved away because I think there are just better products out there.

**mvmac** · August 9, 2015

If TaylorMade is sold, it will be interesting to see what happens with their tour presence/staff. Their tour budget is massive.

**rkim291968** · August 9, 2015

There are rumors within the industry that Nike is potentially interested in TM but it would have to be at a steep discount. Nike does well with clothing and shoes but still lacks a real presence on the Tour with their clubs and golf balls. TM still has good market share with drivers, woods and hybrids and Nike does well with their forged irons so it's a good fit.

This rumor has some credibility as both companies recently laid off a good percentage of their workforce. It can be a prep before the merge.

**imsys0042** · August 9, 2015

I see too many models of TM clubs in peoples' bags. I know their product lines and know that most of what I am seeing is 0-3 years old and there are so many different products that it's really ridiculous to have that much product. They are good clubs, don't get me wrong. But entirely too many product lines for the golf market. Titleist = Apple and TaylorMade = Windows.

**Fourputt** · August 9, 2015

Quote:
Originally Posted by MrDC

The used driver bin at my local shop has about a dozen SLDR's, by far the most, that thing was a big turd and had to hurt them.

But I use a JetSpeed driver and love it, so they make some good, some bad.

I think generally speaking though, TM is not a very popular brand anymore.

Interesting because the people that I know, that play TM drivers. All say that the JetSpeed driver is the biggest Turd that TM has ever made. I have not heard that many complaints about the SLDR driver.

I don't know one person that like the SLDR. My step-dad is a TM guy. He rushed out to buy the SLDR and he couldn't hit it. Probably more him than the club but my impression it it's not very forgiving. Some people just have to have the "it" gear. When I carry it I do well with my GEEK FS3 it cost all of $99. I tried to give him one, I have two, he wouldn't take it.

My brother bought a SLDR last year and he loves his - hits the crap out of it. I love my Aero-Burner 5W and irons. I also love the TM Project (a) balls. In the last month I've gone from mostly Titleist to mostly TaylorMade, primarily because I hit them better (although price on the irons was good too). Still love my Titleist 913 D2 driver though.

**plum** · August 9, 2015

<< ---- SLDR fan

**Natural Patrick** · August 9, 2015

<< ---- SLDR fan

X2

**mvmac** · November 6, 2015

http://www.geoffshackelford.com/homepage/2015/11/5/adidas-plans-to-lay-off-14-of-taylor-made-global-workforce.html

Quote

Adidas Plans To Lay Off 14% Of Taylor Made Global Workforce

Steve Pike with the analysis following Adidas CEO Herbert Hainer's comments that came while announcing third quarter earnings, which were up 7% for Taylor Made.

But not enough to save jobs, apparently.

“While this will negatively impact profitability by a low-double-digit million euro amount in the fourth quarter, the immediate result will be a more nimble organization, which will have a positive effect on the Group’s profitability from 2016 onwards,’’ Hainer said.

Adidas Group reported TMaG sales for the Q3 of 2015 at 159 million Euros in the quarter, an increase from 138 million Euros the same period in 2014. For the nine months of 2015, Adidas Group reported TMaG’s sales increased seven percent to 678 million Euros. That’s approximately $738 million –only about $100 million less than rival Callaway Golf’s total sales estimate for 2015. The Adidas Group did not release TMaG’s earnings numbers.

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