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TaylorMade Golf Delivers Steady Wins

Stocks in this article: ADDYY

Adidas's (ADDYY) TaylorMade Golf division has managed to grow this year as the rest of the golf-equipment industry struggles.

In March, TaylorMade controlled 19% of the irons market, up 30% from a year earlier, according to market-research firm Golf Datatech. It held 31% of the metal woods market, a 25% increase. TaylorMade also produced the three best-selling drivers that month.

TheStreet.com spoke to TaylorMade Chief Executive Officer Mark King by phone from the company's Carlsbad, California, headquarters.

Is this a TaylorMade story or is there optimism for the golf-equipment industry more generally?

King: We've been on a 10-year run. When you bring out new and exciting products that work better, you sell them. When the new products don't work better, you don't sell them. The optimism is only in new technology.

Is it a market-share game going forward?

King: I don't see much spending growth in the foreseeable future, the next one to three years. I don't think there's going to be any significant decreases, either. The category right now is down about 17% this year. But it's not down 17% in units, it's down in dollars.

We've enjoyed the first five and a half months of the year, moving a lot of high-margin new product and gaining market share with promotional activity at lower price points. I think that's going to be the future. The middle is going to go away. Any brand that's positioned in the middle is going to struggle.

Is there room for new players?

King: I don't think so. One of the disappointing aspects of the industry today is that it's going to be dominated by the top three or four players, for the obvious reasons: They have more resources, more technologies, bigger distribution and more marketing clout. And new technologies are harder to find as the USGA has put more limitations on equipment.

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