Despite having to deal with recall complications, Yeti Holdings beat a Wall Street earnings and sales forecast with introductions helping to drive results.
A Yahoo Finance-published analyst consensus estimate for the quarter had adjusted diluted earnings at 54 cents and revenues at $426.4 million.
Net sales were $433.6 million, basically flat to $433.6 million in the year-earlier quarter.
By sales channel and category, according to Yeti, year over year:
- Direct-to-consumer channel sales increased 14% to $259.5 million due to growth in Drinkware as well as Coolers and Equipment.
- Wholesale channel sales decreased 16% to $174.1 million due to a decline in Drinkware as well as Coolers and Equipment.
- Drinkware sales increased 6% to $253.3 million, led by strong demand for Rambler straw lid mugs, expanded offerings in Rambler and Yonder bottles, a new beverage bucket and additional seasonal colorways.
- Cooler & Equipment sales decreased 8% to $171.5 million, primarily due to the stopped sale of the soft coolers affected by the recalls. Despite strong overall consumer demand, hard coolers declined year-over-year primarily due to the success in rebuilding channel inventory during the same period last year. Strong performance in the existing Hopper Flip soft cooler line, as well as cargo, partially offset the impacts.
Yeti indicated that operating income was $61.9 million versus $68.5 million in the year past quarter, as adjusted operating income was $71.4 million versus $73.3 million.
Yeti pointed out that its adjusted measures exclude the impact of the voluntary recalls. In February 2023, the company proposed a voluntary recall of its Hopper M30 Soft Cooler, Hopper M20 Soft Backpack Cooler and SideKick Dry gear case and established reserves for unsalable inventory on hand and estimated product recall expenses as of December 31, 2022, related to gift card redemptions in connection with recall remedies. The company added that 2023 results have been materially pressured by gift card redemptions in connection with recall remedies as well as the stop sale of the soft coolers included in the recalls initiated during the first quarter of this fiscal year.
Matt Reintjes, Yeti president and CEO, said in introducing the financial results, “Our third quarter results demonstrate the continued and consistent execution of the Yeti growth playbook, driving strong brand and product interest while setting up the business for long-term, sustainable growth. Sales in the quarter were in line with our prior outlook, as a diverse range of new product offerings drove strong consumer demand across our major sales channels. Gross margin performance remained exceptional and above expectations, led by strong partnerships with our suppliers on product cost and the ongoing optimization of our transportation and logistics expenses. These gains continue to support growth-focused investments across our business while still driving upside to our bottom line. In addition to disciplined execution during the third quarter, we also successfully launched our expanded line of Hopper M Series soft coolers back to the market earlier in the fourth quarter. We are well positioned to build upon our leadership position in the soft cooler category as these products are more fully distributed across our channels into next year. In addition, we have extended a key customization capability across our global business with the debut of our first e-commerce customization options outside of the U.S. Our consistent ability to drive innovation, combined with our unique omnichannel approach to reaching consumers and our continued brand investments, builds a strong and scalable platform for future growth.”