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Let's play a game of Do You Know? Do You Know that the same company that produces Jim Beam, DeKuyper, and Canadian Club also produces Moen Faucets and Master Lock? Do You Know that the aforementioned company also houses an expansive golf department, boasting Titleist, FootJoy, Cobra, Pinnacle, and Scotty Cameron? All of these products can be found under one company's roof: Fortune Brands, Inc. (NYSE: FO). You may not think that spirits, faucets, and golf have much to do with each other - but if you ever saw me play, you would understand my golf ball's affinity for water and the need to drink heavily to make it seem like I have any business on the course.
Unfortunately, I didn't get a chance to get out on the course too much this past year -- money has been tight and golf courses and equipment are obscenely priced. And it definitely seems that a good portion of casual golfers agree. FO's Acushnet Company (which is home to its previously mentioned golf brands) saw sales drop 13.4% during the fourth quarter. Total sales came in at $212.2 million, down from $245.1 million a year earlier. The golf division noticed an operating loss of $18.3 million compared to $6.7 million a year earlier.
Yearly revenue in FO's golf division dropped 2.6% to $1.37 billion from $1.41 billion. Operating earnings dropped 24.3% to $125.3 million from $165.5 million.
Much like yours truly reviewing his post-18 scorecard, FO's chairman and chief exec Bruce Carbonari tried to paint a rosy post-report picture, "Our golf business delivered its second-best sales year on record, benefiting from new-product development and double-digit growth in Asian markets... While golf results in the seasonally smallest fourth quarter reflected soft industry demand and adverse operating leverage, we benefited from strong sell-in for new advanced technology Titleist golf clubs." I guess when you charge more than $300 for one club, it isn't too far of a stretch to think that you may return to profitability sometime soon (and $45 for a dozen golf balls helps, too).
FO is more than 3% lower after this announcement, the problem is that there are many hazards in the stock's path. The shares face overhead resistance from their 10-week moving average, which recently completed a bearish cross of its 20-week counterpart. This technical formation is often a harbinger of a continued downtrend -- not a good sign for a stock that is looking to drive higher.
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