Yeti beat a Wall Street estimate on earnings but fell short on revenue as the company adapts to changes in tariffs and its supply chain.
Net income came in at $51.2 million, or 61 cents per diluted share, compared to $50.4 million, or 59 cents per diluted share in the year-earlier quarter. Adjusted for one-time events, net income decreased to $55.2 million, or 66 cents per diluted share, from $59.6 million, or 70 cents per diluted share, in the prior-year quarter.
An analyst consensus estimate from Zacks Investment Research had Yeti earnings per adjusted diluted share at 54 cents with revenues at $461.2 million.
Sales slipped to $445.9 million versus $463.5 million during prior-year quarter due to a more promotional drinkware market environment, consumer and retailer caution and inventory constraints caused by a supply chain transition, the company reported.
Direct-to-consumer channel sales decreased 1% to $248.6 million year over year, while wholesale channel sales decreased 7% to $197.3 million due to declines in the company’s Drinkware and Coolers & Equipment segments.
Drinkware sales decreased 4% to $236.4 million in the quarter year over year with growth in international regions more than offset by a decline in the United States region, the company noted. Coolers & Equipment sales decreased 3% to $200.6 million in the period year over year, with growth in hard coolers more than offset by a decline in soft coolers.
Sales in the U.S. decreased 5% from the year-past period to $367.8 million, while international sales increased 2% to $78.1 million, reflecting strong growth in Europe and Yeti’s launch in Japan, partially offset by conservative inventory purchases and caution from Yeti’s wholesale partners in other international regions against robust consumer demand, the company maintained.
Overall operating income was $62 million versus $67.4 million in the year-before quarter, Yeti indicated, while adjusted operating income was $73.2 million versus $80 million.
In announcing the financial results, Matt Reintjes, Yeti president and CEO, said, “We are making excellent progress on our long-term strategic priorities: accelerating innovation, expanding our global brand and diversifying our supply chain. We are seeing these strategies play out in the market with momentum in product innovation and diversification across our portfolio with notable strength in bags, our global expansion with exceptional performance in the U.K. and Europe, and strong end user demand in Canada and Australia, and the transformational shift in our supply chain. Our brand continues to expand, connecting both domestically and, importantly, globally.
“Amidst a disruptive macroeconomic environment, we are positioning Yeti to deliver long-term, sustainable top and bottom-line growth supported by a strong financial foundation,” Reintjes continued. “Our strong balance sheet and robust free cash flow generation are enabling investment in growth initiatives while also advancing our capital allocation priorities, including share repurchases. We exited the second quarter with encouraging momentum across our key growth drivers, and we are seeing signs of continued improvement in the third quarter, reinforcing our confidence in the trajectory ahead.”
As for guidance, Reintjes added, “Our confidence in the business and the underlying operating fundamentals supporting our full-year outlook remains unchanged. I’m particularly pleased with the execution on our ongoing supply chain transition which will meaningfully diversify our footprint and capabilities, positioning us for continued expansion and innovation, driving long-term success. We are modestly lowering our top-line expectations to reflect a slightly more prolonged recovery in drinkware in the U.S. At the same time, we are raising our EPS outlook, primarily due to our strong operating execution and reflecting tariff reduction on China-sourced products, partially offset by increased tariffs on imports from other regions.”
As such, Yeti expects adjusted sales to be flat to up 2%, versus the previous outlook of between 1% and 4%, including an approximately 300 basis point unfavorable impact from supply chain disruptions, and adjusted operating income as a percentage of adjusted sales between 14% and 14.5% versus the previous outlook of 12%. The company anticipates adjusted net income per diluted share of between $2.34 and $2.48, versus the previous outlook of between $1.96 and $2.02, including an approximately 40 cent net unfavorable impact from higher tariff costs.
