Callaway Says Net Income Is Down 84%

Callaway Golf Co. said Wednesday that third-quarter profit fell 84% as demand for its golf clubs waned and prices fell because of stiffer competition.

Carlsbad-based Callaway also said its directors are meeting to discuss a restructuring plan to be unveiled possibly as soon as next week. The plan will include taking charges against fourth-quarter earnings and may also include layoffs.

Net income fell to $5.84 million, or 8 cents a share, from $37 million, or 52 cents, a year earlier. The maker of golfing gear was expected to have a 1-cent loss, the average estimate of analysts polled by First Call Corp.

Revenue fell 33% to $172.9 million from $257.4 million.

“We do not see any significant improvement in sales in the next several quarters,” said Ely Callaway, the company’s founder, who reassumed his roles as president and chief executive just last week after CEO Donald Dye stepped down.

Company stock fell 25 cents to close at $12.25 on the New York Stock Exchange. Its earnings were released after the close of U.S. trading.

The cost of goods sold increased to 52% of sales from 46% in the year-ago period. The company attributed the increase to lower prices for some of its woods and increased sales of less profitable irons and higher warranty expenses.

Callaway also said the board approved a quarterly dividend payable Nov. 24 of 7 cents a share, a penny less than net income. The company plans to review its dividends as part of the restructuring.

Callaway, the leader in the $3-billion-a-year golf club industry, is the largest maker of premium clubs.