Q2 2025 Topgolf Callaway Brands Corp Earnings Call
Good day and welcome to the top 12 Callaway brand, second quarter, 2025 conference call.
All participants will be in a listening mode. Should you need any assistance, please signal a conference specialist by pressing the star key followed by zero.
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I would now like to turn the conference over to Katina. Metad darkus. Please go ahead.
Good afternoon and welcome to Topgolf Callaway Brands, second quarter earnings conference call. I'm Katina Mesa, vice president of investor relations and corporate Communications.
Joining me on today's call are chip Brewer our president and chief executive officer, Brian Lynch, our Chief Financial Officer and chief legal officer, and already Stars Chief Executive Officer of Top Golf.
Earlier today, the company issued a press release announcing its second quarter 2025 Financial results, our earnings presentation, as well as earnings press release are both available on our investor relations website under the financial results table.
Aside from revenue, the financial numbers reported and discussed. On today's call are non-gaap measures. We identify these non-gaap measures in the presentation and reconcile, the measures to the corresponding Gap measures in accordance with regulation G. Please note that this call will include forward-looking statements and involved, risks, and uncertainties that could cause actual results to differ materially from Management's, current expectations.
Please review the Safe Harbor statements contained in the presentation and the press release for more complete description with that. I would now like to turn the call over to chip.
Thank you Cina.
Good afternoon, everyone. And thank you for joining our call today.
Starting on slide 4.
Q2 was another strong quarter for our company, as we met or be expectations across all 3 segments of our business.
I was particularly pleased with the continued concern in our golf equipment business.
Our margin improvements there.
And the excellent consumer response to top. Golfs value initiatives.
Which is significantly. Improved our traffic and sales trends.
On the Strategic front.
We closed our previously announced sale of Jack wolfskin.
Thus enabling greater business focus, as well as providing further Financial flexibility as we move forward on our strategic process for Top Golf.
As you can see on slides 5 through 7.
Was our confidence and our ongoing initiatives.
We are raising our fully your guidance for the Consolidated business adjusted for the sale of Jack Wilson in May of this year.
This includes higher full year estimates for both Topgolf and our Core Business.
And we are doing this. While absorbing the impact of the additional tariffs. There were announced after the years. This year's initial guidance was provided in February.
Turning to tariffs, our best estimate of this year's impact is now approximately 40 million dollars.
Up from 25 million at the time of our last call.
This estimate is included in our full year guidance. Net of our mitigation and cost reduction initiatives, which are of course, ongoing
We believe We Are benefiting from having been proactive on cost and margin initiatives over the last 12 months.
As well as our scale and our category and the expertise of our supply chain team.
Before going further, I'd like to thank all of our employees and partners for their outstanding work year to date in driving our better-than-expected performance in what is an uncertain and challenging operating environment.
The strength and dedication of our teams is making a big difference.
And is highly appreciated.
Now turning to our segment performance and starting with golf equipment.
both revenues and operating margins were ahead of expectations.
And market conditions, remain healthy, especially in the important US market.
For the quarter, our operating margins are approximately flat year-over-year. Despite incremental tariffs expense and benefiting from cost reduction and margin initiatives that we put into place over the last 12 months, as well as healthy market conditions and some help from year-to-date improvements in foreign exchange rates.
Us rounds played or down a little year to date, simply reflecting the weather, but are approximately flat on a playable, our adjusted basis.
As mentioned, the US Gulf consumer remains healthy and engaged.
Looking outside the US market conditions, remain strong in the UK and Northern Europe markets. But are a little softer year-over-year in Asia and Central Europe.
Our market shares are down a little this year, reflecting a more competitive launch, Cadence and 100% consistent. With our previously, communicated expectations,
I continue to feel good about the golf equipment segment.
Our brand and our Outlook.
In the second half of this year will be launching. Several exciting, new products, including our new single piece Forge line of exforge and exforge Max Irons
as well as our new premium. Opus, SP wedges. Featuring spin pocket technology.
These are exciting new products that we believe will be well received in the marketplace.
We also created some fun brand Energy. Via our partnership with the Happy Gilmore movie.
And our Odyssey hockey stick Putters and chrome Tour golf balls.
Perhaps even more importantly, we remain confident in our product development pipeline.
And the products that will be launching in 2026 and Beyond.
We believe in our continued commitment to product development and innovation.
Will drive our long-term brand and Technology leadership positions.
as a result of all of this,
We are raising our full year Revenue, expectations for our golf equipment segment.
In the active lifestyle segment, there is little new to report from an operational basis.
Based on third-party data market conditions, for the athleisure category, remain down mid to high single digits during Q2.
Our revenues reflected these market conditions.
Partially offset by the continued growth of the women's category at Travis, Matthew and positive. Sell through Trends in the Callaway apparel brand in Japan.
Segment: Operating margins are up year-over-year, benefiting from the cost reduction in margin and initiatives.
As well as the sale of Jack wolfskin.
Turning to Topgolf, our traffic trends improved considerably, with same venue sales finishing Q2 down approximately 6%.
This was better than our expectations as our value initiatives and our summer fund passes, both exceeded our forecasts.
Menu sales for the first 4. Retail weeks of July continued, the positive trend at down approximately 3%,
perhaps most importantly, our traffic results were up 6% in Q2 and 12% in that same July period.
Last quarter, we explained that third-party research shows that the consumer continues to enjoy the top golf experience.
But that we have to reposition our value for reception.
As shown on slide 11, this continues to be the case as 100x, data measuring 21 entertainment and dining Brands ranks. Topgolf number 1 in the important metrics of fun atmosphere and food and drink.
But only 16th for value and 19th for price.
Data like this, drove the team to lean into the expanded value initiatives that we implemented during Q2.
And after doing. So the definitive consumer reaction to these initiatives, reinforces our belief that we are on the right path.
And let me be clear.
Given the strength of our concept along with its substantial defensive mode.
We view this as a big strategic move with significant upside.
1, that will be particularly important as Topgolf. Transitions to an independent company.
As we change the consumer's value perception on Topgolf.
And continue to drive the quality of the experience.
We are opening ourselves up for both more new and repeat customers.
As well as sustained performance throughout inevitable, economic Cycles.
Turning to margin.
The team also continues to do an excellent job in this area. Again exceeding, our internal expectations,
And delivering venue-level iBidder margins that were approximately flat year-over-year.
And the already mentioned decline in same venue sales.
These row results, reinforce our long-term conviction for upside, in venue level margins.
Even while driving improved value.
Arty will give you more color on this during his comments.
Turning to Top Golf balance of the Year. Same venue sales and revenue. Guidance, we are revising the same venue sales guidance from down 6 to 12% to down 6 to 9%
for Q3 specifically we expect same venue sales to be downloaded mid single digits.
During his section already, will provide you with more specifics on the key initiatives that have driven, our stronger than expected results for Q2.
And that we're excited about for the balance of the year.
Now, switching to the Top Golf process.
We remain 100% committed and active in the process, we are still evaluating both a spin and a sale.
however, the pending change in the leadership at Top Golf, which we announced last week,
Makes a spin impractical for the second half of this year.
If a spin is the ultimate shareholder value-maximizing path.
It will most likely occur in 2026. After we have a new CEO in place.
In conclusion.
I'm pleased with our results in the direction of our business.
I believe our teams are doing an excellent job managing, a complex, and at times uncertain environment.
While also staying focused on continually improving our core businesses and effectively managing our strategic process.
We remain energized and excited about our future.
Before I turn it over to Arty, I'd like to thank him for his leadership at Topgolf over the last four and a half years, and wish him well in his new opportunity.
Now, Arty over to you for more indepth view of top golf and then to Brian for CFO comments.
Thanks chip. I'd like to share our performance for each of our key Focus areas along with what to expect for Q3 2025, and balance of years, starting with same venue sales.
In Q2 our Core 1 to 2 Bay business was down 5% with traffic up mid to high single digits and our 3 plus Bay, corporate events, business was down. 12% with traffic up low, single digits.
Over a year despite the added value mix and the removal of booking fees.
Our Playmakers across the organization are focused on driving profitable traffic growth and it's clear our players are responding to the Strategic pivot. We made in Q2
As mentioned on last quarter's call, our number 1 priority is to drive traffic growth and improve value perception.
Our value offerings Sunday, Funday Top Golf nights, early week value, and the summer fun pass have seen an immediate positive response and resulted in traffic accelerating throughout the quarter and into the beginning of the third quarter.
June traffic was up approximately 10% and July traffic was up approximately 12%.
With same venue sales for retail July the first 4 weeks of the quarter down approximately 3%.
I'm very pleased with the balance of new and repeat players that are enjoying these offerings which make up approximately 1/3 and 2/3, respectively, our strategy of offering more compelling. And accessible value is working and we plan to stay the course as these offers continue to build momentum
I'd like to specifically call out the summer fund pass, which offered unlimited play during non- Peak weekday hours. Exceeding, our expectations selling more than 2 times. The number sold when we last offered the pass in 2022,
The success of our summer fund PASS gives us a lot of enthusiasm ahead of the launch of our new subscription program, which we will be rolling out in a sampling of venues in late Q3 in a process similar to the value rollout that's been successful in Q2, with broader implementation during Q4.
It's clear that players. See value in these passes and subscription-based offerings and it's a natural fit for the Topgolf target audience.
Especially families and golfers.
While the 3+ Bay events business will likely remain challenged in the near term as lead volumes remain down.
We are encouraged by the changes. We've made providing more flexibility on rates and times for event planners.
Which have increased conversion. Rates year-over-year.
By the soft outlook for 3+ Bay events. As chip mentioned, we have increased our overall 2025, same venue sales, guidance. Given the momentum we are seeing in 1 and 2 Bay.
We are seeing strong continued growth in youth events, and 3 plus Bay events.
and our building an additional layer, which will support the business long-term when the corporate events environment reverts and improves
We've continued to make enhancements to the experience, our 60 and 90 minute. Reservations rolled out systemwide in Q2 and our mixing at approximately half of total digital Reser, reservations.
Our rollout of the toast point of sales system is on track with a proximately 20% of venues on the new Point of Sales system. And we expect a little over half of our venues to be on toast by year end.
Early signs show that spend per visit has improved in these venues given the more seamless and speedier playmaker service
As we get deeper into the roll out, we'll see increasing benefits including mobile order in the bay which we expect to further boost spend per visit improved player, experience and allow our Playmakers to do what they do. Best interact with players to bring more joy to their top golf experience.
And finally, on the games front, we had a successful launch of our second. Marvel experience. Bringing the Fantastic 4 into our block party game.
This brings newness to an existing Topgolf equity in block party and leverages a powerful partnership with another Global entertainment brand.
To capitalize on the upcoming football season. We are launching our first ever Topgolf football game in the fall.
In 51 venues we are in the process of installing professional football spec field goal posts with the top golf game. That creates a fun competitive environment. Where the task is simple, hit a golf ball through the post.
Our marketing calendar will be focused on activating the top golf occasion around the biggest sport in America. We are very excited to bring football to life at top golf with our new game complemented, by new offerings to encourage gathering at Topgolf to watch football this season.
And on the development front, we opened Panama City Beach Florida at the end of the quarter.
It's been another strong opening consistent with model returns and a 72-day hybrid venue.
Player responds to the brand and the market has been outstanding.
Set to open late in the fourth quarter.
In closing, I'm very pleased with the accelerating traffic Trends. In Q2 that continued in July
We are expecting Q3 same venue sales, to sequentially improve from Q2 down low to mid single digits.
And we are committed to continuing to refine our offerings to respond to what we know players want from Top Golf.
Though, I will be staying through September to ensure a seamless transition. This will be my last earnings call and I would like to take a moment to recognize the accomplishments. The team has had over the last 4 plus years.
These include but are not limited to the step change Improvement in margins alongside player experience. Enhancements are now robust digital business which has enabled the immediate change in perception on value and sustaining the amazing culture in our venues and venues support center that makes Topgolf. Such a differentiated brand.
Chip, I'm particularly grateful for your support and mentorship throughout.
The future is very bright for Top Golf. And the leadership team is well, positioned to drive future profitable growth over to you Brian.
Thank you, Arty, and good afternoon, everyone.
We are pleased with our second quarter results, in the current environment as we exceeded our forecast. For the second quarter, allowing us to absorb. The recently announced incremental tariffs
An increase our full year guidance for our ongoing businesses.
Before moving to Q2 results, I want to comment on the sale of a Jack Wilson business.
Our teams did a great job hustling to close the transaction 1 month earlier than anticipated.
compared to last year, this resulted in approximately 15 million dollars, Less in Revenue,
but more importantly, resulted in approximately 7 million dollars more in adjusted eua,
As we avoided, the June loss, that typically occurs at Jeff goskin, due to the seasonality of that business.
In addition, the closing of this transaction March significant milestone.
As we continue to realign our strategic priorities toward our core businesses and enhance the company's Financial flexibility and preparation for the plan separation of Top Golf.
Turning to our Q2 results.
Consolidated revenues were 1.11 billion dollars, representing a 4% year-over-year, decrease primarily due to decreased Revenue in the active lifestyle segment.
Which in turn was primarily due to decreased Revenue in the Jack wolfskin business.
Excluding the impact from Jack Wilson. Sales would have declined approximately 2%
Primarily due to the decline in Top, Cop, same venue sales.
Overall results, exceeded our expectations largely due to stronger than anticipated performance in the top golf and golf equipment segments.
Due to adjusted evadav 196 million, decreased 5% year-over-year, primarily due to the decreased Revenue incremental, tariffs and increased foreign currency hedge losses.
Partial set by the impact, from the sale of Jack Wilson, gross margin Improvement initiatives and cost savings initiatives in the top golf and golf equipment segments.
Moving to segment performance.
In golf equipment, Q2 Revenue was approximately flat year-over-year at 412 million, which exceeded our expectations, going into the quarter.
Despite tariffs in an unfavorable FX impact, the cogs gross margin in our golf equipment. Business was up slightly
Golf equipment. Q2 operating income was 76 million decreased 1% year-over-year.
With gross margin and cost savings initiatives. Mostly all setting the slight decrease in revenue and incremental tariffs.
Year-to-date operating margins, for golf. Equipment are up over 200 basis points.
an active lifestyle, Q2 Revenue, decreased 36 million year-over-year to 214 million, primarily due to Jack wolfskin, including the sale, which resulted in 1 less month of Revenue, as well as soft market conditions in the active apparel industry, as chip mentioned,
Active lifestyle operating income increased by 6 million to 21 million primarily driven by the sale of Jack Wilson and cost savings initiatives.
Park sale set by the lower sales volume.
Moving to Top Golf.
Q2 Revenue decreased 2% year-over-year primarily due to a 6% decline in same venue sales.
Partially offset by higher revenue from new venues.
Top golf golf same venue sales of down. 6% was ahead of our expectations.
Primarily due to improved traffic Trends, as previously discussed.
1% due to increased depreciation from new venues.
While adjusted ibida increased 1 million year-over-year to 111 million.
these better than expected adjusted Eva results reflect approximately flat i-bidder margin, resulting from ongoing cost reduction efforts and improved operating efficiencies
the top golf team has done great work finding opportunities to improve same venue sales Trends, including the implementation of the value offerings and the summer fund pass,
Switching gears to balance sheet and liquidity our available liquidity, as of June 30th, 2025 increase, 378 million to 1.16 billion dollars. Due to increase cash compared, to second quarter 2024,
Primarily driven by approximately 290 million dollars in cash proceeds from the sale of Jack Wilson.
As well as proceeds from lease financing and cash from operations.
At quarter end. Net debt was 2.39 billion down from 2.62 billion last year primarily due to cash proceeds from the sale of Jack Wilson.
Excluding venue financing debt which is essentially capitalized rent related to our Top Cop venues and including the convertible debt.
Our Reit adjusted. Net debt was 853 million down 387 million year-over-year.
As a result of the increased cash.
Net debt, leverage improved to 4.1 times from 4.4 times, driven by the higher cash balance.
Read adjusted net leverage, which includes rent, interest payments.
Improved to 1.8 times from 2.4 times.
We are comfortable with these leverage levels.
Our inventory balance decreased 38 million versus the end of Q2 20224 to 609 million at the end of Q2 2025.
This more than offset increases in golf equipment, inventory levels due to year-over-year timing difference.
Now, let's turn to our outlook for the remainder of the year.
As a reminder, the full-year guidance we provided in May incorporated the full-year financial forecast for the Jack Wolfskin business.
Please see slide 19 in the investor deck for details.
With the successful completion of the Jack wolfskin sale. We are now updating our guidance to remove Jack wolfskin, and to reflect and improve the outlook for our ongoing businesses.
Moving to specific guidance.
The sale that Jack wolfskin business, reduces our full year forecast by approximately 265 million in revenue and 26 million dollars of adjusted Ava.
Both representing the Jack wolfskin forecast for June, through December.
Given the sale occurred in May, the seasonality of that business resulted in an outsized impact on adjusted Eva this year.
As we incurred the seasonal losses, during the first 5 months of 2025.
But don't receive the second half. Evida it, typically generates
Our updated Revenue, guidance of 3.80 billion, to 3.92 billion dollars.
Represents an increase of just over $30 million at the midpoint versus prior guidance, excluding Jack wolfskin.
This updated guidance also reflects an improvement in the midpoint of our Top Cop. Same in new sales Outlook.
Which, as I will discuss in a moment more than offset. Some timing headwinds in the business, from 1 less venue opening in Q4, which has now moved to 2026.
Moving to adjusted evaa. We're also raising the midpoint and narrowing the range of our full year. Adjusted Eva guidance.
Given the improving Trends. We are essentially covering the loss of the 26 million. Second half, Jack wolfskin adjusted ebita.
And the approximate $40 million expected headwind from tariffs this year.
Excluding Jack Wilson, the midpoint of the updated guidance range of 430 million to 490 million dollars. Represents an increase of just over 25 million dollars versus prior guidance.
Our business is benefiting from better than expected sales and the team's excellent work, finding additional cost efficiencies
As well as our ongoing gross margin initiatives.
This outcome is a significant accomplishment in this difficult operating environment.
To down 9%.
As a result, we are narrowing the range of our full year, Top Golf, Revenue guidance to 1.71 billion to 1.77 billion.
Which is 5 million higher than the previous guidance at the midpoint.
We are also narrowing, the range of our 4 year. Top Golf adjusted IBA. Guidance to 265 to 295 million.
Which represents a 10 million increase versus prior guidance at the midpoint?
With regard to CapEx, given the changes in timing of lease financing precedes, our outlook for Topgolf Callaway Brands Corp. net CapEx has changed to $110 to $122 million from $90 to $110 million.
Separately, we are lowering our Core. Business capex Outlook from 60 million to 50 million.
We continue to expect to be free. Cash flow positive at both, the total company and a top golf in 2025.
Now, turning to our outlook for the quarter in Q3, we are forecasting Consolidated revenue of 880 million to 920 million versus 905 million in Q3 2024.
wish for comparison purposes, excludes the Jack Wilson results in 2024,
This estimate reflects projected, same venue sales.
Of down low to mid single digits and the more competitive golf equipment environment, we mentioned previously.
We estimate Q3 adjusted evida to be in the range of 78 to 98 million.
Compared to 119 million in the prior year, excluding Jack wolfskin.
This decrease is primarily due to the projected decline in Top Cops and new sales as well as the impact of tariffs announced earlier this year.
in summary, we are pleased with our financial performance in Q2, but even more encouraged by the current trends in our business including continued consumer strength, in our golf equipment business,
And improving Trends in same menu sales at Top Golf.
We've made good progress with our value initiatives. At Top Golf.
And our gross margin and operating expense initiatives in our Core Business.
These Trends and actions are allowing us to increase our guidance, despite the incremental tariffs,
Our available liquidity remains strong and was bolstered by the sale of the Jack Wilson business.
In addition, our strategic initiatives are ongoing and we remain committed to generating value for our shareholders, through the separation, of top off from our Core Business.
With that said, I would now like to turn the call back over to the operator for Q&A.
Thank you. We will now begin the question and answer session to ask a question. You may press star 1 on your telephone keypad. If you're using a speaker-phone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question please press star then to
your first question comes from Simeon. Gutman from Morgan Stanley. Please go ahead.
Hi everyone. Um, a nice, nice turn in in Topgolf. Hey, chip you mentioned? I don't know if I'm using this word, right? Maybe robust talks around. Um, the process even though a spin, maybe less likely for the time being
Can you talk about whether the robust process was?
Equal between Spin and sale. And while spin is less likely, you know, does this
Change actually boost the chance of a sale.
Hey Simon. Uh, thank you for the nice comments on uh the
Change in trends, that top off. Um, the process is ongoing, um, so no change at all, in our strategic Direction there. Uh, only, uh, really in the timing of a potential spin given that that's now, uh, not practical in this calendar year, um, and no real comment on, uh, the, uh, other parts of the process. Um, those are ongoing, I can't, uh, uh, comment specifically on that, um,
I would say though that you're, uh, that the improved sales, Trends are positive for all scenarios, in fact fundamental, uh, to a positive outcome and, uh, those sales Trends, uh, or we have already commented on, so, uh, very pleased with that and no change in strategic Direction.
uh, only timing of the potential spin if that is the
Shareholder maximizing solution.
Okay.
and then on on tariffs,
With respect to the guidance.
For the second half. So you've done a nice job managing, what we've seen, is there anything that that has changed in the last I would say minutes but the last few weeks that that makes a difference in in the man. Yes. I mean it it does seem to change uh, pretty frequently and we're viewing it as, uh, uh, you know, becoming more clear but still, you know, we wouldn't be surprised to see, you know, potentially more changes coming. Uh, as we mentioned uh, at the time of our last call in may we forecasted the Tariff impact for the full year to be about 25 million. We now expect that to be about 40 million so it increased uh uh 15 million, 15 million with the more recent uh,
Uh uh change in rates and uh timing of some of those being uh determined. And uh, you know, we have that uh, embedded in our guidance, net of the mitigation efforts that we're taking uh as we speak.
Okay. I I'll I'll yield. Thanks appreciate it.
Thank you.
Your next question comes from Matthew boss from JP Morgan. Please go ahead.
Thanks and great to see the the recent Improvement.
So Chip, maybe could you speak higher level to health of the golf industry, maybe highlights? You're seeing this season and could you elaborate on the drivers of the improving golf equipment business? That's supported the increased core revenue forecast for this year.
Yeah, uh Matthew sure. And thank you for the the nice comments. Uh,
you know, the golf equipment business has been, uh, very healthy, uh, throughout the year and has remained so um, through Q2 and uh, you know, even more recent results, uh, the consumers clearly healthy and engaged rounds played are, uh, flat on a year-over-year basis or down uh negligible but uh on a playable, our basis flat
Um, and the equipment business is measured by sell through is probably up low single digits.
uh, so in certainly, in the US market, a very strong,
Um, Trend, uh, we had gone into the quarter with a little bit of apprehension, whether that could change with some of the macroeconomic, uh, things that we were hearing about whether terrorists would have any impact and it has not, uh, the equipment business remains healthy, and continuing some, uh, good trends that we've seen. Now, over an extended period of time,
Great. And then Arty on the traffic inflection at Topgolf during the second quarter and then further Improvement in July. So do you see today's pricing and value proposition? Is it now fully right set and on comp progression from here. I mean, what's the additional step change needed to return comps to positive territory over time?
Yeah, I think it's um, we're obviously very encouraged. Matt on the I call it the immediate change that we saw. I think it's a tribute to
not only the research but the quality of the testing and how the teams executed on this, um, you know, in terms of the inflection to to positive, I'm not prepared to sort of give you a date at this point in time. I can just tell you that
The the momentum month-to-month week to week that we saw from the when the initiatives were rolled out.
Um and the current mix of these initiatives is is yield is very profitable for us. You know, the the margins being stable year-over-year, the super encouraging um but as they continue to build momentum um they'll obviously be a point in time where that that does happen. But I'm not prepared to sort of give you a date yet.
Great. That's the plan.
Thank you. Your next question comes from Alex Perry, from Bank of America, please go ahead.
Hi, thanks for taking my questions here. Um, I just first, can you talk about what value initiatives were the biggest contributors. Um, what's the role of the half off Gameplay at at Topgolf? That I think has been extended sort of Monday through Thursday. Was that a big 1 and then what what type of traffic lift have you seen after? You know, you rolled initiatives like that out and what has been the impact on ticket. Thanks.
We had the value in Market, um, not for the entire quarter. So during the last earnings call, uh, we had tested it in many venues and we previewed what we thought it would yield. And it obviously yielded results that uh, more better than we expected and they they fled through better than we expected. So um, you know, super encouraging.
Uh, as far as the specific, uh, offers, you know, the the day part, you know, the, the, the early week value, or the day of week value you reference, which is the 50 off golf, which is pretty unique offering for us where we're still getting full price on FNB. Um, so it's while we're able to, to Market 50 off. Uh, we're still seeing players come in and, and obviously have uh, you know, the great food and beverage offering that we have uh the Sunday fund pass was was a big hit in the quarter as well. We we sold twice as many, uh, as we had previously and what? I tell you, the combination of those 2 things bringing in new players, it really sets up well for subscription and the fall. And then, uh, the TG nights offering, which is a late night on Friday. And Saturday has been a great experience enhancer. And I think, you know, all 3 of those together, uh, combined with the Sunday Funday, which we referenced last time. Um, have have worked quite well.
Really helpful and then just on the July comp sort of accelerating further. Um, what's the key driver there is that just the consumer sort of becoming aware of of the value. You know, offerings and then, um, the comp guide and sort of the low down low to mid singles, I guess implies a slight diesel at the from the current run rate is that just an element, you know, of conservatism. Uh thank you.
Sure, yeah, um I'll take that in 2 parts, as it relates to July with value. We're just being super consistent. The advertising is super sharp and it's building.
So um we're seeing players, you know, respond to it. And you know, they they come in and they want to come back because they they got good value from us. So um, you know, credit to our marketing teams just for being super sharp with the communication. We have a, a new marketing leadership team and they're just doing a fantastic job. So, I'm very pleased with that, and I think the momentum in July is a tribute to that.
Um as far as, you know, what what you referenced in terms of the guide, you know, events are still um you know, are they're still soft, so we're seeing continued momentum, uh, and the walking and reservations business. We've taken some action on the event side where we're seeing increased conversion. But I would take the guide as a function of, you know, some some risk in in events. Um, but the the value is really hopping with the walk-in reservation side.
Incredibly helpful, best of luck going forward.
Thanks.
Thank you. Your next question comes from Noah, zatkin from keybanc Capital markets, please go ahead.
Hi. Thanks for taking my questions, I guess first, if you could just touch on kind of the cost reduction efforts, um, including labor efficiency initiatives, um, that kind of helped stabilize the top golf margins in the quarter. Um, where are you kind of at what? What opportunity do you see remaining there? Thanks.
Sure. So, you know, the, the teams, you know, executed at a very high level. I think when we gave the guidance on, i-bidder margin last quarter, we, you know, we didn't know exactly where the value was going to mix and we wanted to, you know, be prudent that we maintain the player experience. So a big part of all this is making sure not only are we improving value perception, but that our players are having a better and better time. We want to make sure that we were staffed properly, uh, to do so and what we found is just I'd say continued methodical improvements and efficiencies in the venue, uh, you know, the last, you know, 3 or 4 years. We've pretty consistently been able to do this, um, you know, tactically. It's a, it's a new labor model. Uh, that you know, just Garners more efficiency allows our our Playmakers to have more time with our players on the tee line. We're seeing some of this with the toast roll out. Uh, where we're, we're going to, you know, we're in 20% of the the venues right now will be an over half, the venues by year, end and that allows for, you know, kind of a
Immediate speed of service improvements in our Playmakers to, to serve more Bays. But, um, you know, for lack of a better term, our teams are just executing at a high level and they're taking the challenge to hand and, um, you know, it's flowing through really nicely. And, you know, based on the guidance, we provided last time, we're, we're trending better than, um, you know, the, the 100 to 200 basis points, you know what we're closer to the 100,
Great. Um, and maybe if you could just kind of give a quick update on the Travis Matthew business and how that's been trending. Thanks.
Uh, slow this year. So if you look at the athleisure market it's down in the mid to high single digit uh that has had some impact on the revenues and uh trajectory of that business. Uh but it continues to do well in the women's category um and we continue to feel uh you know, very good about the long-term health and potential of that brand.
Thank you very helpful.
Thank you.
Thank you. Once again, if you do wish to ask a question. Please press star 1. Your next question comes from. Jay Alto from Raymond James, please go ahead.
Thanks, good afternoon everybody. Uh, congrats already by the way, on your new role looking forward to uh,
Talking to you about motorcycle sales in a few months. Um, but uh, until then, um, golf. So a couple of questions, I guess? First, you know, if, if we look at the, you know, the the Legacy Callaway business for lack of a better term, um, you know, the IBA margins, at least the guidance implies this year, you know, still a high single digits, which is, you know, below where it was pre-cooked that business becomes standalone.
What do you think is the is the kind of longer term, you know, steady state margin that that business should generate?
Yeah. Hey, Joe, it's Chip, uh, we're not at this point updating any long range. Uh, guidance on the uh, Legacy business. Um, you know, we've got a pretty good track record in that business of, uh, uh, being a leader in the category and driving, uh, strong earnings, uh, over an extended period of time. I don't see any, uh, change in that trajectory. So, uh, We've also had quite a bit of, uh,
You know, good results. This year, in terms of gross margin initiatives.
Um, you know, those have allowed us to uh, offset tariffs and other uh, impacts, which were not foreseen going into the year. Uh, we expect to continue to drive efficiencies going forward. And, uh, you know, we'll update your further on long range goals, uh, at at, at the appropriate time in the future.
Understood and just to follow up on that just to clarify an earlier comment you made chip does Arty's departure make a spin less likely and what does uh a top golf what would their balance sheet look like in a in a post spin environment?
Sure, uh, Joe it, it delays a spin. So, it makes a spin, uh, uh, impractical for this calendar year. Uh, but doesn't make a spin, less likely, uh, per se, we're still active in these, uh, strategic process. Uh, both spin sale being considered, uh, no change in our Direction there. Um, Small Change in timing on the, uh, spin side of it. And, uh, you know what, that delay in timing at the last call, we talked to some length about how that balance sheet would look, uh, with improving Trends right now and with a delay in timing, I'm going to, uh, not update, uh, exactly how that balance sheet would look in a, uh, a spin. I don't have specific timing, uh, for that either. Uh, but there has been no change in the Strategic Direction, the only
Change that uh is the of note is timing. And uh also the positive trends that uh We've covered during the call.
Okay, understood. Thank you.
Thank you.
Thank you. There are no further questions at this time. I'll now hand the conference back over to chip any closing remarks.
Well, thank you Harmony. And, uh, uh, just a couple quick comments. Uh, first of all, I want to thank the entire Top Golf Callaway brand teams for, uh, uh, the excellent results in what has been a, uh, a challenging environment. Um,
already thanks to you for the 4 and a half years of great service and progress at uh, uh,
Top Golf uh we're going to miss you and we wish you all the best in your new Endeavor and obviously thanks to everybody who attended the call today. We appreciate your participation and uh interest in Top Golf Callaway Brands. We look forward to further updating you on our Q3 call, uh, later this year. Thank you.
Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect