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01/11 03:34
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary indicates mixed signals: strong product innovation and international growth expectations are overshadowed by supply chain challenges, declining EPS, and lower gross margins. The Q&A section reveals concerns about the supply chain impact, promotional pressures, and lack of specific guidance. Despite innovation and expansion efforts, the financial outlook and management's evasive responses suggest a negative sentiment. Given the company's market cap, the stock price is likely to react negatively, with an expected decline of 2% to 8% over the next two weeks.
Sales Sales decreased 4% to $445.9 million year-over-year, due to more cautious spending from both consumers and retail partners.
Drinkware Sales Drinkware sales declined 4% to $236.4 million year-over-year, attributed to a more promotional environment and temporary inventory constraints stemming from the ongoing supply chain transition.
Coolers & Equipment Sales Coolers & Equipment sales decreased 3% to $200.6 million year-over-year, with growth in hard coolers offset by a decline in soft coolers. Bags business gained traction due to an expanded product lineup.
Direct-to-Consumer Sales Direct-to-consumer sales decreased 1% to $248.6 million year-over-year, accounting for 56% of total sales. Strong performance in Amazon marketplace and corporate sales was offset by softer U.S. e-commerce demand.
Wholesale Channel Sales Wholesale channel sales decreased 7% to $197.3 million year-over-year, driven by declines in both U.S. and international regions. U.S. Drinkware was impacted by a highly promotional market and cautious retail partners.
International Sales International sales grew 2% to $78.1 million year-over-year, representing 18% of total sales. Europe led growth, while Australia and Canada faced sell-in challenges due to inventory balancing and cautious wholesale partners.
Adjusted Gross Profit Adjusted gross profit decreased 4% to $257.6 million, with a slight increase in margin to 57.8% from 57.7% year-over-year. This was driven by product cost optimization and selective price increases, offset by higher tariffs.
Adjusted SG&A Expenses Adjusted SG&A expenses decreased 2% to $184.4 million year-over-year, representing 41.3% of sales compared to 40.5% in the prior year. This reflects tight expense management and strategic investments.
Adjusted Operating Income Adjusted operating income decreased 9% to $73.2 million, representing 16.4% of sales year-over-year.
Adjusted Net Income Adjusted net income decreased 7% to $55.2 million year-over-year, with adjusted net income per share decreasing 6% to $0.66 from $0.70 in the prior year.
Inventory Inventory decreased 10% year-over-year to $342.1 million, reflecting strategic management of inventory purchases.
Cash Position Cash position increased to $269.7 million from $212.9 million year-over-year, supported by share repurchases and strategic capital deployment.
Asia-based innovation center: Opening in Thailand later this month to complement the Austin Innovation Center, enhancing global innovation capabilities.
New product launches: On track to exceed the target of 30 new products this fiscal year, including food bowls, insulated food jars, updated rambler jug, travel bottle, and new sports jugs.
Shaker bottle acquisition: Acquired designs and IP for a patented shaker bottle to expand product portfolio.
Coolers & Equipment: Introduced Daytrip soft coolers, beach chairs, and new hard coolers with strong early traction.
Bags and packs: Momentum with new Cayo and Ranchero backpacks, Camino totes, and Crossroad backpacks.
International expansion: Strong growth in Europe, expanded distribution in Japan from 17 to 270 doors, and sustained demand in Canada and Australia.
Strategic partnership with Fanatics: Launching team color Drinkware and hard coolers for NFL, MLB, NHL, and NCAA programs.
Supply chain transformation: Diversifying supply chain to reduce reliance on China, with less than 5% of goods exposed to U.S. tariffs by year-end.
Omnichannel performance: Strong Amazon marketplace performance and robust corporate sales, but cautious wholesale ordering and lower conversion rates on yeti.com.
Brand engagement: Increased presence at global events, strategic digital campaigns, and partnerships to deepen customer engagement.
Capital allocation: Repurchased $23 million in shares and reduced capital expenditure outlook to $50 million for fiscal 2025.
Macroeconomic Uncertainty: Ongoing macroeconomic uncertainty and cautious behavior from consumers and retail partners have led to slightly below-expected top-line demand in Q2.
Drinkware Market Challenges: The U.S. Drinkware market remains highly promotional and continues to shift away from trend-driven growth, impacting sales. Conversion rates on yeti.com were below expectations due to less intentional shopping behavior.
Supply Chain Transformation: The company is undergoing a major transformation in its global supply chain, which has caused temporary inventory constraints and disruptions, particularly in the Drinkware category.
Tariff Costs: Higher tariffs, including a 30% rate on goods from China and 20% on goods from other regions, have impacted gross margins and added approximately $40 million in costs for 2025.
Wholesale Channel Caution: Cautious ordering and tighter inventory management from wholesale partners, particularly in the U.S., Canada, and Australia, have affected sales.
Soft Cooler Sales Decline: Higher-priced soft coolers faced challenges due to evidence of consumer trade-down behavior, impacting sales in the Coolers & Equipment category.
International Wholesale Challenges: International wholesale channels, especially in Australia and Canada, experienced sell-in challenges due to inventory balancing and cautious wholesale partners.
Revenue Expectations: Full year sales are expected to be flat to up 2% compared to fiscal 2024 adjusted net sales. The Drinkware business is anticipated to range from flat to down low single digits in fiscal 2025. International business is projected to grow between 15% and 20% in fiscal 2025. U.S. sales are expected to decline low single digits this year.
Margin Projections: Gross margins for the year are projected to be between 56.5% and 57%, an increase of 200 to 250 basis points compared to prior guidance. Operating income for the full year is expected to be between 14% and 14.5% of adjusted sales.
Capital Expenditures: Capital expenditures for the year are projected to be approximately $50 million, down from an earlier estimate of $60 million. This reduction reflects a shift in accounting treatment for capital investments.
Market Trends: The Drinkware market in the U.S. remains challenging, with a highly promotional environment and cautious consumer behavior. However, Drinkware is expected to return to growth in Q4, driven by new product launches and stabilization in the category. International markets, particularly Europe and Japan, are showing strong growth potential.
Business Segment Performance: Coolers & Equipment category is expected to improve meaningfully in the back half of the year, driven by innovation and improved inventory availability. Bags and packs are experiencing strong momentum, with new products exceeding expectations.
Strategic Plans: The company is on track to open an Asia-based innovation center in Thailand, complementing the Austin Innovation Center. This will enhance product development and establish a 24/7 global innovation cycle. The supply chain transformation is expected to be completed by year-end, reducing exposure to U.S. tariffs on goods sourced from China to less than 5% of total cost of goods sold. A strategic partnership with Fanatics will expand the company's presence in sports, offering team color Drinkware and hard coolers for various sports leagues.
Share Repurchase Program: During the second quarter, YETI repurchased 745,000 shares of its common stock on the open market for $23 million under its current $450 million share repurchase authorization. The company plans to repurchase approximately $200 million worth of shares during fiscal 2025.
The earnings call highlights strong international growth, robust innovation, and strategic partnerships, which are positive indicators. Despite challenges in the U.S. Drinkware market, the company's strategic initiatives and confidence in Q4 sales growth suggest a positive outlook. The Q&A section reinforces this with optimism about international expansion and new product launches. While there are some uncertainties regarding tariffs and long-term guidance, the overall sentiment is positive, especially with the $300 million share repurchase plan. Given the market cap, a positive stock price movement (2% to 8%) is expected over the next two weeks.
The earnings call summary indicates mixed signals: strong product innovation and international growth expectations are overshadowed by supply chain challenges, declining EPS, and lower gross margins. The Q&A section reveals concerns about the supply chain impact, promotional pressures, and lack of specific guidance. Despite innovation and expansion efforts, the financial outlook and management's evasive responses suggest a negative sentiment. Given the company's market cap, the stock price is likely to react negatively, with an expected decline of 2% to 8% over the next two weeks.
The earnings call highlights mixed results: a slight sales increase driven by Coolers & Equipment, but a decline in EPS and Drinkware sales. The guidance shows modest revenue and EPS growth, but the free cash flow outlook was reduced. The Q&A section reveals uncertainties in demand and tariff impacts, with management providing limited specifics. The company's market cap suggests a moderate reaction. Overall, the positive elements are balanced by negative factors, leading to a neutral stock price expectation over the next two weeks.
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