Nike and Adidas are getting out of the golf business at exactly the wrong time

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Hans Deryk/Reuters

Tiger Woods blows on his putter.

Nike and Adidas are ditching their golf businesses, but it may be the wrong move.

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Both retailers have decided to close up shop on making clubs, golf balls, and other equipment due to flagging sales.

According to research by Deutsche Bank, however, this may have been a big mistake.

In a note to clients on Dick's Sporting Goods, analyst Mike Baker noted that rounds of golf played have been growing over the past two years and the growth appears to be accelerated.

"First, rounds played were reported up 5.3% in June and up 2.7% [year to date] in 2016, as show in our Chart of the Week," wrote Baker, using data from the Professional Golf Association.

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"This is an acceleration from up 1.8% in 2015, and continues a three-year run of improvements in rounds played since the business troughed in 2013."

More golf played would generally indicate more golf equipment purchased, and Baker said this could be a boon for Dick's Golf Galaxy franchise. Obviously, more rounds played does not necessarily equal higher sales, but it is not a huge leap to think that as golfers hit the links more and more they are increasingly likely to replace gear.

So in spite of lagging online interest, at the very least Americans are using their golf clubs more.

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Deutsche Bank

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