Acquisition Opens New Avenues for Ashworth

While sales of golf equipment and the growth of the sport itself remains flat, Carlsbad-based Ashworth Inc. bucked the trend last year, turning in record numbers and capitalizing on a strategy of diversifying its product line and distribution channels.

In July, Ashworth, a designer and maker of golf apparel, acquired Gekko Brands LLC, an Alabama maker of two brands of headwear, for $23 million in cash. The purchase doubled Ashworth’s distribution channels to six and will add about $30 million annually in revenues.

“We’ve very pleased with the acquisition,” said Ashworth Chief Executive Randall Herell. “They’ve met their plans, and they’re off to a great start in 2005.”

Gekko makes sport hats under the brands Game and Kudzu. The company has about 40 employees, all of whom were retained following the sale.

Ashworth now employs some 390 people, with 150 working in Carlsbad and another 150 working at its new distribution center in Oceanside.

Herell said the decision to acquire Gekko and diversify its product line began in 2001 as it became clear the company’s existing golf channels could provide limited growth potential.

“We were looking for additional brands, not just to grow our business, but to leverage our existing channel relationships,” he said.

With the Gekko deal, Ashworth apparel can be sold through additional distribution channels.

The Game’s hats are sold through an existing network of 1,000 colleges and universities, in resorts, and through sporting goods retailers. The Kudzu brand of hats is sold through NASCAR customers, and outdoor/hunting and fishing distributors.

Ian Corydon, an analyst for B. Riley