CEO David Abeles is taking his third shot with TaylorMade-Adidas Golf from the rough, but he is aiming to get the golf gear giant back to par.
Abeles was re-hired for a second time roughly a year ago—this time to run the Adidas unit.
The lifelong golfer says he is “thrilled to be back” and anxious to return the company atop the money-making list. Sales have sagged by about 1/3 during the past three years, down below $1 billion last year, after carding a record $1.7 billion in revenue during fiscal 2012.
To be fair, it’s been a rough patch for the game and the industry during that span as the number of golfers playing has declined. Meanwhile, TaylorMade’s longtime leader and CEO Mark King was promoted to president of Adidas North America and his successor, Ben Sharpe, stayed less than a year at the helm before Abeles started his third stint with the biggest maker of golf equipment.
As much of America turns its attention to legendary Augusta National Golf Club and The Masters, Abeles shared his thoughts with Fortune correspondent Robert Gray on a wide range of topics including TaylorMade’s outlook, the impact of sponsored pro golfers on sales, and who will win the prestigious tournament.
Fortune: After sales fell 15% last year at TaylorMade-Adidas Golf, do you see that turning around this year?
Abeles: We’re about to close the first quarter and we’re seeing that turnaround already. Our forecasts are up, how we index versus prior years is up and we’re very excited.
Two years prior to my arrival [as CEO] the industry had softened and because of our size we felt that more than most. Last March we reset and redesigned the organization towards a growth future.
We have pretty good indicators already that we’re going to have a strong year—the launch of M1 [drivers] last fall and its continued strength and the recent launch of M2 [rescue clubs]—by market share it’s the best in golf by a measureable share—and we’ve got the TOUR360 Boost shoe from Adidas Golf; all three have carved out leadership positions.
We know from the strength of these products and our tour players moving right into these products, club pros wearing and playing these products–and we’re seeing the market share data to support this–we’re positioned with these products for a good year.
A win at Augusta [by a TaylorMade-sponsored PGA TOUR golfer] would accelerate it.
Fortune: As a mass-market golf gear maker, do you rely more on new players coming to the game or existing golfers trading up?
Abeles: We rely on both. It’s critically important that we stay connected with the core players that play 80% of rounds and bring technology that’s relevant to them. It’s important that recreation players play TaylorMade and realize they can play better golf. It’s our primary responsibility to bring products to market that will encourage you to play more often.
Fortune: The number of overall golfers fell slightly to 24.1 million last year from 24.7 million in 2014, but the National Golf Foundation reports a near-record 2.2 million beginners gave the game a try in ’15. Nascent programs such as the third annual Drive, Chip & Putt competition, which culminates Masters Week at Augusta, and the PGA of America’s Junior League Golf have expanded rapidly.
Is TaylorMade focusing more on this youth market for growth?
Abeles: Yes, it is a growing area. It doesn’t represent a large part of revenue for us, but it’s important. We just rolled out in January junior clubs for the first time in five or six years; high-performance golf equipment for juniors.
We are now the primary partner for the America Junior Golf Association. We’re the primary footwear and golf ball sponsor of AJGA.
PGA Junior League Golf is close to me and TaylorMade. My kids are engaged in it and TaylorMade was one of the first partners in on the initiative.
Fortune: Last summer Adidas CEO Herbert Hainer said in the first half of the year report that the company had engaged an investment bank to “analyze future options for the company’s golf business.” Is the unit for sale?
Abeles: In my 12 months back, 14 years all in [at TaylorMade], I’ve never felt as much support from our parent company as I do right now. The executive team and Mr. Hainer have been unconditionally committed to get TaylorMade and Adidas Golf to grow and we’ve got leadership in big categories in golf. We are building a sustainable growth model.
There has been a strategic review of our golf business, you have to review the group when there’s a downturn and that’s what our parent company is doing.
Fortune: How important is it for a TaylorMade Tour Staff golfer to win The Masters—is there a correlation with sales?
Abeles: [The Masters] is the introduction of golf in the spring for the calendar year. We have seasonality: the end of March and early April are really important.
When we win a major—fortunately—it’s fairly regularly, it has a meaningful impact on our business, especially when they play new products we’ve introduced. When Jason Day won the PGA Championship [last year] our call center took twice as many calls as normal. When Jason and [and fellow TaylorMade pro] Dustin Johnson played so well at the British Open it was incredible to see the outerwear they had on, we sold out of those products 24 hours after they wore them.
There’s a direct correlation between how well they play and our sales.
There’s no doubt the [PGA] Tour play has a direct correlation in the interest of the products being played. We’re excited and have a good chance to have one of our athletes win this year.
Fortune: It’s prediction time for The Masters. Who will slip on the iconic Green Jacket awarded to the tournament winner this weekend?
Abeles: My prediction is whoever dons the green jacket will be wearing a TaylorMade hat. Our guys are peaking at the right time.
