Reuters reports that Callaway Golf has posted a lower-than-expected rise in quarterly profit, as cost increases and other issues weighed on margins.
Net profit in the quarter ended June 30 was $22.5 million, or 33 cents per share, compared with $18.4 million, or 27 cents per share, a year earlier. Excluding charges for the integration of the Top-Flite golf ball operations into its business and for cost-cutting measures, earnings were 35 cents a share. Analysts on average forecast 45 cents a share, according to Reuters Estimates. Gross margin fell to 41 percent in the quarter from 45 percent a year earlier. “Our second-quarter gross margin results did not meet our expectations due to some unanticipated execution issues and cost increases,” George Fellows, chief executive, said in a news release. A spokesperson could not be reached to elaborate, Fellows said steps to improve margins would not help results until late in 2006. Sales rose 6 percent to $341.8 million.
Callaway shares closed 16 cents, or 1.3 percent, lower at $12.51 on Wednesday on the New York Stock Exchange, before earnings were reported.