Adidas to Sell Ailing Golf Division (TaylorMade, Adams, Ashworth) to Focus on Clothing [Bloomberg]

[nevets88]

Warning - video autoplay is loud and a pain to pause. I wonder who its potential buyers would be? At half a billion USD, not many, will probably be bought out by someone like Callaway and the industry consolidates?

Quote

Outgoing Chief Executive Officer Herbert Hainer is cleaning up Adidas’s operations as he sets the table for Kasper Rorsted, who takes the reins in October. Adidas got into golf when it bought French ski and skate company Salomon in 1997, but younger consumers are staying away from the game, and it isn’t popular in emerging markets like China and India. Sales plummeted 13 percent last year as the industry has been beset by discounting.

‘‘The golf market is not growing at the moment but it’s also not falling further,” Hainer said during a call with reporters. The portion Adidas plans to keep is producing solid returns and the company is cutting labor and manufacturing costs, the CEO said.

http://www.bloomberg.com/news/articles/2016-05-04/adidas-decides-to-sell-golf-division-to-focus-on-clothing

[Chilli Dipper]

I can't see TaylorMade being swallowed up by a competing OEM; a venture capitalist takeover is more likely.

[newtogolf]

27 minutes ago, Chilli Dipper said:

I can't see TaylorMade being swallowed up by a competing OEM; a venture capitalist takeover is more likely.

UA would be the most likely competitor but I'm not sure UA wants to be in the hardware business especially seeing how Nike and now Adidas are struggling with it.  Clearly the most profit is in the soft goods which UA already has.  

I can see Adams and Ashworth getting acquired by a Golfsmith or Dicks type business.  I don't see venture capitalists being interested in TaylorMade if Adidas retains the soft goods rights.  

[Chilli Dipper]

51 minutes ago, newtogolf said:

UA would be the most likely competitor but I'm not sure UA wants to be in the hardware business especially seeing how Nike and now Adidas are struggling with it.  Clearly the most profit is in the soft goods which UA already has.  

I can see Adams and Ashworth getting acquired by a Golfsmith or Dicks type business.  I don't see venture capitalists being interested in TaylorMade if Adidas retains the soft goods rights.  

It would be a surprising move for Under Armour, since they haven't shown a lot of interest in entering the equipment business in sports where that is a less expensive proposition.

If potential buyers want soft lines, it wouldn't make sense to spin off Ashworth. Adidas has no need for a premium apparel brand catering to a "classic" golf style if it isn't going to be a golf company, but a parent of TaylorMade would.

[newtogolf]

13 minutes ago, Chilli Dipper said:

It would be a surprising move for Under Armour, since they haven't shown a lot of interest in entering the equipment business in sports where that is a less expensive proposition.

If potential buyers want soft lines, it wouldn't make sense to spin off Ashworth. Adidas has no need for a premium apparel brand catering to a "classic" golf style if it isn't going to be a golf company, but a parent of TaylorMade would.

I don't consider Ashworth a major player in golf soft goods.  I'd guess they are ranked 15 - 20 and seem to do most of their business in discount retail and online stores.   

If Adidas retains the soft goods rights to TaylorMade, Adidas Golf and Adams Golf then I'm not too excited to acquire Ashworth if I'm a venture capitalist.  

[Al B Tross]

I'm sure the over-saturation of the equipment market hasn't helped the likes of TaylorMade or Nike. Seems like each has released a new driver or irons technology about every year recently.  I'd love to grab a new Nike Vapor driver but I can't justify dropping $300+ on one when the $250 one I bought two years ago is just fine. Apple is facing the same pinch with lagging iPhone sales - people just aren't upgrading as frequently as they did in the past (and phones are way more of a necessity golf clubs - I know that seems insane, right? ). 

Could be an interesting gamble for an investor - particularly the notion of the younger customer base. I anticipate that Spieth, Fowler, Day, DeChambeau, etc will keep build a fan base and there will be a surge in this demographic.  Granted, the sure revenue will be on the apparel side but I could see it creeping over sooner rather than later onto the equipment side if you add a mid-range (I.e. more reasonably affordable for a 20-something) offering.

[nevets88]

Golfweek on the development.