Stitched savoir

Sales of Callaway Golf Apparel continue to propel Ashworth Inc. (NASDAQ: ASHW) revenue upward in these tough economic times for the golf apparel business. In fact, if weren't for the success of the Callaway apparel brand over the past three quarters (the brand is entering only its fourth selling season), Ashworth?s sales growth would be considered generally flat.

Ashworth reported fiscal third quarter sales of Callaway apparel of $7.7 million (a 1.9 percent increase versus the same quarter a year ago), while nine-month sales of the brand increased 110 percent to $23.8 million. Overall Ashworth sales for the nine months were $117.1 million, a 17 percent increase compared to the same period a year ago.

Ashworth President Randy Herrel cited poor weather and other "external factors" as the primary reasons why sales of the Callaway brand increased only 1.9 percent in the fiscal third quarter. Also, Herrel said large initial orders in '02 also impacted the fiscal '03 sales numbers of Callaway brand apparel, as did a slow down in sales to green-grass accounts.

Still, Herrel is bullish on the Callaway apparel brand's future in terms of sales, on course as well off course.

"We're pleased with our account penetration the past 18 months. We've shipped to more than 4,200 (green grass) accounts globally to date," Herrel said. "With this penetration and as economy rebounds, we believe we are in right position for 2004. We plan to continue to grow this brand by opening new accounts in the U.S., Europe and Canada."

Herrel added that Spring/Summer '04 sales for Callaway apparel are strong and that cannibalization of the Ashworth brand by the Callaway brand is minimal.

"We still believe (Callaway brand sales) will be in the high $20- to low $30-million range for the first full year of operation, which we believe is outstanding," Herrel said.