New Golf Club Products Drive Sales : Big Bertha Irons, Graphite Shafts Capture Golfers’ Fancy

Two golf club manufacturers are driving sales higher and farther with new products that have caught the fancy of golfers trying to improve their swing.

Callaway Golf, one of Wall Street’s hottest stocks since it went public a year ago, is devising a rationing scheme to satisfy the huge anticipated retail demand for its new “Big Bertha” line of irons.

And Aldila Inc., a manufacturer of graphite shafts for golf clubs, says it expects another year of 20% or so growth as golfers convert to the lighter weight and more accurate shafts.

Both companies stand to benefit from a projected upswing in the U.S. golf market, which had been flat for the past couple of years because of the sluggish economy.

“It was hard to sell many new premium-priced golf clubs when mid-level executives were getting laid off in 1990 and 1991,” said Gary Barbera, president of Aldila.

The market for golf equipment is expected to surge by about 6% this year, easily topping last year’s $1 billion, according to experts. Although the National Golf Foundation estimates there are 25 million golfers in the United States, only about half play regularly and replace equipment frequently.

Golfers who routinely head out to the links aren’t reluctant to buy top-quality equipment, analysts said.

Callaway’s Big Bertha irons, retail priced at a cool $170 apiece, don’t go on sale until May, but pro shops and sporting goods stores are already clamoring to be on Callaway’s waiting list for stock.

The irons are expected to be a big hit, based on the runaway success with its innovative Big Bertha woods.

Since it introduced those clubs four years ago, Carlsbad-based Callaway has seen its revenues soar with nearly triple-digit growth. The Big Bertha woods--actually made of metal--are widely perceived by golfers as having an innovative design that can hit the ball farther and is more forgiving to poor shots.

Sales have also gotten a boost from pro golfers like Johnny Miller and Paul Azinger who have endorsed the clubs. Nearly one-third of all touring pros use Big Bertha woods.

When Callaway executives spoke this week at the Raymond James Financial equity conference, dozens of pension fund managers and analysts waited in line for a chance to swing one of the Big Bertha clubs in the meeting room.

But John Mahoney, an analyst with Raymond James, cautions that the stock, now trading around $40 on the New York Stock Exchange, may be overpriced and subject to the whims of the golf market.

“Callaway’s success is a testament to the golfing public’s willingness to use whichever products they believe will improve their game,” said Mahoney. He said Callaway could lose ground to other industry innovators who might develop a hot-selling golf club.

Industry analysts, who have watched Callaway’s stock increase by 500% since it went public and then split, have issued 1994 earnings estimates ranging from $1.45 a share to as high as $2.90 a share. In 1993, Callaway earned $1.17 per share on revenues of $254.6 million.

Aldila, based in San Diego, has experienced more modest growth of about 20% annually over the past few years. The company boasts it is the single biggest U.S. consumer of graphite, using more than even Boeing does for its jets and strong, lightweight airplane parts.

Golfers with graphite clubs contend they outperform steel shafts by hitting balls greater distances with improved accuracy.

Aldila sells its graphite shafts to virtually all major golf club manufacturers, including Callaway and archrival Ping, as well as Spalding, Wilson, McGregor and others.

Aldila expects to become the leading supplier of golf club shafts in 1995, overtaking Black & Decker unit True Temper, which sold $85 million worth of mostly steel shafts in 1993.

“Graphite has blown away the competition, much like it did with tennis and racquetball rackets a few years ago,” said Kim Carpenter, Aldila marketing vice president, who estimates that half of all clubs now sold are made of graphite.

Aldila is expected to earn about $1.20 per share in 1994 on revenues of $78.3 million, according to Wall Street estimates. In 1993, it earned 97 cents a share on sales of $62.6 million.