Shares in Callaway (NYSE:ELY) found the cup on news that sportswear giant Nike (NYSE:NKE) has decided to drop golf clubs, ball and bags from its roster.
Callaway is the market leader in the US for golf irons and shares climbed as much as 10% at one point following Nike’s decision to walk away from an increasingly competitive market.
Golf in general is under pressure in the US with an ageing player profile and decline in membership at clubs, though the number of rounds played has edged higher this year.
Chip Brewer, Callaway’s chief executive, told CNBC. "For those of us with commitment, momentum and specialist focus in the equipment space, we see it as an opportunity."
Last month, the company reported higher sales in all of its major regions and it was “cautiously optimistic” about the remainder of the year.
Nike is not the only company cutting back on golf. Adidas has had the Taylormade, Adams and Ashworth golf clothing businesses up for sale for some time.
Nike's golf business put up the worse performance of any division in the company last year, analysts said, while sales have fallen for three years running.
The company will continue to make golf clothing and shoes and also sponsor leading players.
Brand president Trevor Edwards said the company was committed to being the leading supplier in these areas.
Nike currently sponsors multiple major tournament winners Rory Mcilroy and Tiger Woods, but both have struggled recently with indifferent form and injuries.
Woods was synonymous with the brand at his peak but has not won a tournament for almost three years due to persistent back problems.
Four–time major winner McIlroy meanwhile signed a five year deal reportedly worth US$100mln in 2013.
Callaway shares closed 4% higher at US$11 valuing the company at US$1.03bn, while Nike held steady at US$54.79 giving it a value of US$91.6bn.