Yahoo Finance Presents: Chip Brewer, Topgolf Callaway Brands CEO

Yahoo Finance’s Brian Sozzi sits down with Topgolf Callaway Brands CEO, Chip Brewer, at the Goldman Sachs 29th Annual Global Retailing Conference in New York City, as they discuss the company’s name change, Topgolf, hybrid work, and the golf business.

Video Transcript

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BRIAN SOZZI: All right, joining me now is Topgolf Callaway Brands CEO, Chip Brewer. Chip, good to see you. And I almost just called you Callaway Golf company.

CHIP BREWER: You almost did, Brian.

BRIAN SOZZI: Well, talk to us about the name change. That just happened. I believe on the Yahoo Finance page, you are-- your ticker symbol changed. Your name changed. What's behind it?

CHIP BREWER: Well, it's a big move for us, as you can imagine. But we are now Topgolf Callaway Brands, and it really reflects the change that we've made in the business over the last several years-- the merger with Topgolf, the evolution of this business to being the leader in what we call modern golf. And so we're not only the strong player in traditional on-course golf that we have been for so long, but we also have this beautiful asset in Topgolf, which is growing the game and really exciting consumers across the country now.

And creating the new name, new ticker, it just does a better job of communicating to investors the full breadth and scope of our business.

BRIAN SOZZI: I spent my recent birthday at Topgolf. I walk in, the line is out the door. It is an amusement park with golf attached to it. How big is this brand inside your company now, and how are you going to grow it?

CHIP BREWER: That's the biggest part of our business right now.

BRIAN SOZZI: More than clubs?

CHIP BREWER: It is the largest segment of our business--

BRIAN SOZZI: Wow.

CHIP BREWER: --and it is also growing at double-digit rates. We're going to add 11 this year, new venues. We'll have 81 by the end of the year. Same-venue sales are mid to high single digits. It's just performing beautifully and the consumer loves it, so the sky's the limit on Topgolf, and we couldn't be more happy with this performance.

BRIAN SOZZI: When you talk to investors, what is their biggest concern with a brand like that? Is it margins versus clubs and apparel? Is that the questions you get?

CHIP BREWER: Well, it's interesting. So we are-- on the positive side, we're a unique entity now, right? There is nothing else like us in the world. No combination of traditional golf and off-course golf.

And it's unique. It's defining itself, reinforces itself. It has strong competitive advantages. But it doesn't give you anything to compare yourself with either, right?

BRIAN SOZZI: Yeah.

CHIP BREWER: And so people are still digesting that. And Topgolf is still proving itself, but boy, it's proving itself fast. The numbers keep getting better and the consumer experience has been so good for so long. I can't imagine that investors aren't going to catch on really quickly on what a great business this is.

BRIAN SOZZI: What is this concept of modern golf that you mentioned? Because I have not heard that from other places, other CEOs, other executives. Where did you come up with it?

CHIP BREWER: Well you won't hear it from other executives because they can't really lead it the way we can. So golf, as you know it, traditional golf-- we love it, Brian. It's all part of the fabric.

BRIAN SOZZI: Sometimes. Sometimes we love it. I've been struggling 15 years.

CHIP BREWER: I get it. But you got-- I hear you have some new clubs.

BRIAN SOZZI: That's true.

CHIP BREWER: I think you're in better shape now.

BRIAN SOZZI: That's true.

CHIP BREWER: But traditional golf, there's about 25 million golfers in the US that play one round per year, traditional on the golf course, et cetera. But the game's really evolved and changed over the last 10 years.

And now, there's the same number playing what's called off-course golf. It's really being led by Topgolf. But it's venues where you have golf entertainment, not on a traditional course. It's more inviting, it's inclusive, it's diverse, it's young. It's the new pathway to the sport.

It's growing significantly faster than traditional golf. And the two combined are what we call modern golf. Golf is now what we grew up traditionally playing, and their fathers and mothers may have played.

But it's also going to a Topgolf venue or a Five Iron location. It's playing simulator golf. It's new technology. And candidly, it's a lot more energetic, exciting when you put the whole thing together.

BRIAN SOZZI: I'm going to spare you from sharing my stories from my caddy days because a lot of those rounds would absolutely put you to sleep. We're going to take that offline. It's not so pretty. But workplace flexibility-- how has that changed your business?

CHIP BREWER: It's been a-- just a remarkable tailwind for Topgolf Callaway Brands, both in the traditional golf segment and in Topgolf. So lots of tailwinds, lots of energy around the sport of golf, both in its traditional sense and the off-course segment. But hybrid work environments and the flexibility that that creates have been significant boons for golf, both in its modern form on the Topgolf side and the traditional side. So we're really excited about that. I think it makes people's lives better, candidly.

BRIAN SOZZI: It depends how you play though. It depends how you play.

CHIP BREWER: A bad round of golf or a trip to Topgolf is always better than a commute to the office, Brian.

BRIAN SOZZI: Point well taken. What demand signals-- so we've talked to a lot of retail and consumer executives at the Goldman conference. So far, things seem to be-- things seem to be holding up. What are you seeing as you look out towards the holiday season?

CHIP BREWER: Well, our business is doing really well. Our consumer is very strong. Our golf equipment business is up this year, strong double digit.

The Topgolf business, exceptional demand there. Almost too long a wait time, candidly. But we are going to be adding a bunch of new venues and are going to be using some digital technology to help improve on that going forward. But we see strength in our consumer still.

BRIAN SOZZI: You got a question about this on the earnings call, and I don't have the right answer for it, but maybe you do-- that the battle between the PGA TOUR and LIV Golf-- does that help you? Does it hurt you? Do you-- have you even measured it?

CHIP BREWER: We can't-- it's a little early to measure it. It's certainly been interesting to watch, should we say, Brian? And it's kind of polarizing or controversial in some ways because some people are very strongly of allegiance to one side or the other.

But what it seems to be is a lot of money entering the sport and a lot of-- more energy around the game. And the PGA TOUR, to their credit, has responded. I think they're going to make their product even better. And I don't see how those types of investments into the game of golf, along with all of the other energy around the sport and money coming into it, can be anything but net positive for Topgolf Callaway.

BRIAN SOZZI: Do you still have the pause with Phil Mickelson? Have you thought about taking that off the table?

CHIP BREWER: Phil and I are good friends. I had coffee with Phil last Friday, and the relationship is great. We are still paused from a sponsorship perspective. He's happy with his life right now, moving on to the next phase. And we'll certainly reevaluate that going forward. But we continue to think highly of him and wish him nothing but the best.

BRIAN SOZZI: Last but not least, any golf tips for me? Now that I have you in the hot seat, what should I be doing? What should I not be doing?

CHIP BREWER: Well, you-- I think you're in pretty good shape now with it. I know your equipment choice, and--

BRIAN SOZZI: Yes. I ditched another brand. We're going to leave them nameless.

CHIP BREWER: I think we should, but glad that it tested out for you. And I'll bet you'll be winning some of your Nassau bets going forward.

BRIAN SOZZI: Fair enough. All right, Chip Brewer, good to see you, and we'll talk to you soon.

CHIP BREWER: Thank you. Great to be here.

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