Dive Brief:

• Topgolf Callaway Brands plans to split its business into two independent entities, the company said Wednesday in a press release. The separation is expected to be completed in the second half of next year.
• Topgolf, which in 2021 merged with golf equipment company Callaway, will become a standalone public company. Artie Starrs, current CEO of Topgolf, will continue to serve in this role.
• Management previously said in its Q2 2024 earnings release that it would pursue a “full strategic review” after Topgolf posted disappointing same-venue sales performance and returns on stocks.

Dive Insight:

Separating the businesses gives management the ability to enhance strategic focus, optimize capital allocation, and simplify operating structures, per the press release. Topgolf will maintain its focus on profitable same-venue sales growth, improving operating margins through efficiencies and building new units.

“Since our merger with Topgolf, we have made considerable investments in the Topgolf business that have dramatically expanded its scale, digital capabilities and venue profitability,” Chip Brewer, president and CEO of Topgolf Callaway Brands, said in a statement. “These investments, combined with the hard work of the Topgolf team, have allowed us to outperform our original growth and free cash flow expectations.”

While Topgolf’s revenue grew 5% to $494 million during Q2, up from $471 million in the year-ago quarter, same-venue sales shrank 8% following softer-than-expected traffic “as the business navigates the current cyclical macro challenges,” the company said in its latest earnings release. Topgolf had about $1.8 billion in revenue for the 12 months ending on June 30, 2024, per the press release.

The company will sell off at least 80% of Topgolf. Callaway will retain all existing Topgolf Callaway Brands’ financial debt, but Topgolf will maintain its venue financing obligations, and be funded with a “significant cash balance.” Topgolf will cut its new venue development plans to the mid-single-digit range. 

The two companies will maintain a relationship through “ongoing value-creating commercial agreements with one another,” the company said. For example, Callaway will continue to be Topgolf’s exclusive golf equipment partner.