Callaway Golf shares surge as rival Nike exits golf markets

Shares in Callaway Golf jumped as much as 8.5% in New York trading after Nike announced plans to abandon the golf-equipment market, removing a competitor from the industry.

The shares rose as high as $11.48 in the wake of Nike’s statement yesterday that it would stop selling golf clubs, bags and balls.

The rally marked Callaway’s biggest intraday gain in almost six months. Nike will continue to offer footwear and apparel for the sport.

Nike’s exit gives Callaway more breathing room at a time that the golf industry is trying to stage a comeback.

The company said last month that sales were growing in all of its major regions and it was “cautiously optimistic” about the second half. The market for golf has suffered from waning interest in recent years, weighing on results.

“I’m confident that Callaway Golf is in a much stronger position today than it has been in quite some time,” chief executive officer Chip Brewer said on a conference call in July.

Sales at the Nike Golf division, meanwhile, fell over 8% to $706m (€630.6m) in the fiscal year that ended in May. That made it the company’s worst-performing major category. Nike shares were up slightly.

Nike built its golf business around the stardom of Tiger Woods, who helped draw interest to the sport in the late 1990s and early 2000s.

But the athlete took a break from golf after a car accident outside his Florida home in 2009 led to an admission of marital infidelity. He returned to the sport but never regained his earlier dominance.

Mr Woods, 40, has used Nike equipment, and the company sells a clothing line under his name. The Oregon-based company said it will continue to innovate in apparel and shoes.

“We’re committed to being the undisputed leader in golf footwear and apparel,” said Trevor Edwards, president of the Nike brand.

“We will achieve this by investing in performance innovation and delivering sustainable profitable growth for Nike Golf.” Golf ranked as Nike’s smallest category last year.