Callaway Golf Co (ELY), NIKE, Inc. (NKE), Dicks Sporting Goods Inc (DKS): Should Investors Bet on a Turnaround at This Golf Equipment Pioneer?

In fiscal year 2013, Dick’s has reported a rise in overall sales, up 5.4%, as it continues to build out its national network of stores.  However, its growth has been capped by weak comparable store sales, especially in its smaller Golf Galaxy chain of specialty stores.  The stores may also be suffering from cannibalization of sales from Dick’s own in-store golf shops that offer a full assortment of products, as well as club repair, tuning, and gripping services.  Nevertheless, the golf category and its Golf Galaxy chain remains one of the focal points for the company, which plans to reformat the store base with a more interactive customer experience that will hopefully lead to stronger future sales.

The bottom line

Callaway operates in a competitive business that has relatively short product lives, estimated at roughly two years, and requires heavy expenditures on endorsements to create end user demand.  While the company has improved its operating and financial position, including replacing much of its high-cost preferred stock with convertible debt, it hasn’t earned an annual operating profit since 2008.  As such, investors might want to wait for this story to develop further and stick with the industry’s brand giant, NIKE, Inc. (NYSE:NKE).

The article Should Investors Bet on a Turnaround at This Golf Equipment Pioneer? originally appeared on Fool.com and is written by Robert Hanley.

Robert Hanley has no position in any stocks mentioned. The Motley Fool recommends Nike. The Motley Fool owns shares of Nike. 

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