Editors' pick: Originally published June 30.
Nikereported this week that sales at its golf business plunged 8% to $706 million for the fiscal year ended May 31. Excluding the impact of the strong U.S. dollar, sales dropped 6% from the prior year. It was the worst-performing business for Nike in terms of sales last fiscal year.
Weak sales for Nike golf -- which represents about 3% of total sales for the apparel and footwear giant -- has now become a recurring theme in recent years with the injury prone Woods being spotted less in riveting final rounds of PGA Tour events and other Nike product endorser Rory Mcllroy lacking the star-power of Woods.
Sales for the Nike golf division fell 2% to $771 million for the fiscal year ended May 31, 2015. Excluding the impact of the strong U.S. dollar, sales were unchanged from the prior year. Nike golf didn't light up it up on the sales line the year before, either. Nike's golf division saw sales relatively unchanged at $792 million for the fiscal year ended May 31, 2014. Excluding the impact of the strong U.S. dollar, sales rose a meager 1%.
Adding insult to injury for Nike here? People are back out playing more rounds of golf, which is spurring sales of new drivers, shoes and irons.
Earlier this year the National Golf Foundation reported, for the first time since 2012, the number of golf rounds played in the United States increased in 2015. Helped by a warmer than average winter, golf rounds played increased 5.5% in the first three months of 2016, according to Golf Datatech. In March alone, rounds played boomed by 13.2%.
"Some brands came out with some really great product that captured the imagination of the golfer," said Dick's Sporting Goods(DKS) - Get Report CEO Ed Stack on a May 19 call with analysts. Stack praised all of the big names in golf product manufacturing but Nike for their latest innovations. "Taylor Made with the M1 and the M2 [drivers and irons], Callaway with the Great Big Bertha [driver], and there has been some new shoe designs out from FootJoy -- so, there has been some good products out there."
Adidas is on the comeback trail not only in the sneaker business, but also in golf.
Same-store sales for Dick's Golf Galaxy chain rose 1.7% in the first quarter, while the golf business inside of Dick's stores did slightly better, according to the company.
One brand in particular may be hurting Nike golf at the moment: Adidas. According to Adidas, its Taylormade equipment brand returned to growth in the first quarter with sales up 6% from the prior year. Adidas credited momentum behind metal woods and irons. In addition, Adidas said sales for its broader golf business also increased during the quarter, driven by high single digit growth in footwear.
Adidas golf apparel and Taylormade equipment is used by number one ranked golfer, and this year's U.S. Open champ Dustin Johnson and number two ranked golfer in the world Jason Day.
The trajectory of sales for Nike golf may not reverse in the near-term for several reasons.
First, the harsh reality is that Woods may not play a single competitive tournament this year as he tries to recover from lower back surgery, meaning less face time on TV for Nike golf's biggest pitchman.
Said Woods recently on the timetable for his return, "I just need to get to where, strength-wise, I can handle the workload of playing out here on a weekly basis, practicing after round, not having to go ice my back and all that kind of stuff -- I need to get to where I can play 18 holes out here and go to the range for an hour and work on my game," who then added, "Just not quite there yet.''
Not spotted at the summer Olympics: Nike's Rory Mcllroy
Meanwhile, number-four-ranked golfer in the world Mcllroy has decided to skip the Olympic Games in Rio de Janeiro due to concerns about the Zika virus, while Woods will likely sit out due to injury. Under normal circumstances, Nike would be poised to have its shirts, golf balls and golf clubs used by Mcllroy and Woods plastered all over TV screens and social media feeds around the world. Now, that won't happen.
The company's other athlete endorsers for golf -- Paul Casey and Charl Schwartzel -- are lesser-known players who may not even appear at the Olympics based on their current world rankings. If they do, each lacks the ability to drive product sales in the same way as Mcllroy and Woods.
Talk about a business being buried in the rough.