Yeti Holdings ((YETI)) has held its Q2 earnings call. Read on for the main highlights of the call.
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The recent earnings call of Yeti Holdings painted a mixed picture, reflecting both optimism and caution. The company showcased strong international growth, successful product launches, and a strategic transformation of its supply chain. However, these positives were tempered by declining sales, cautious consumer spending, and challenges within wholesale channels. Despite these hurdles, Yeti raised its EPS outlook, although it continues to grapple with tariff impacts and inventory constraints.
Strong International Expansion
Yeti Holdings reported a 2% increase in sales outside the U.S., amounting to $78.1 million. This growth was primarily driven by robust performance in Europe and expansion efforts in Japan. The company remains committed to its international growth strategy, aiming to further capitalize on these markets.
Product Innovation and Launch Success
Yeti’s recent product launches, including the Cayo backpack and Daytrip coolers, have been met with strong early traction. The company is on track to exceed its goal of launching 30 new products within the fiscal year, underscoring its commitment to innovation and market responsiveness.
Supply Chain Transformation
Significant progress has been made in diversifying Yeti’s supply chain. By the end of the year, less than 5% of the cost of goods sold will be exposed to U.S. tariffs on goods sourced from China, marking a strategic shift aimed at mitigating tariff impacts.
Increased EPS Outlook
Yeti raised its EPS outlook due to disciplined operations and tariff relief, despite a modest adjustment to top-line expectations. This adjustment reflects the company’s ability to navigate economic challenges while maintaining profitability.
Strong Cash Position and Share Repurchase
Ending the quarter with $269.7 million in cash, Yeti repurchased 745,000 shares for $23 million. The company plans to continue its share repurchase program, with $200 million earmarked for fiscal 2025, demonstrating confidence in its financial stability.
Decline in Sales
Sales decreased by 4% to $445.9 million, with declines noted in both the Drinkware and Coolers & Equipment categories. The U.S. Drinkware market, in particular, faced challenges due to a competitive promotional environment.
Cautious Consumer Spending
The second quarter saw top-line demand slightly below expectations, attributed to ongoing macroeconomic uncertainty and cautious behavior from consumers and retail partners.
Inventory Constraints
Temporary inventory constraints, stemming from the ongoing supply chain transition, impacted performance, especially in the Drinkware category. This highlights the challenges Yeti faces in balancing supply chain adjustments with market demand.
Wholesale Channel Challenges
Wholesale channel sales decreased by 7% compared to the previous year, with declines in both U.S. and international regions. Retail partners exhibited cautious ordering and tighter inventory management, reflecting broader market uncertainties.
Tariff Impact on Costs
Despite some relief, higher tariffs continued to impact Yeti’s adjusted gross profit, which decreased by 4% to $257.6 million. The net impact of tariffs on EPS was $0.07, illustrating the ongoing financial burden of tariff costs.
Forward-Looking Guidance
Yeti Holdings provided updated guidance for the fiscal year, projecting full-year sales to be flat to up 2% compared to fiscal 2024, with a 300 basis point impact from supply chain disruptions. The Drinkware category is expected to range from flat to down low single digits, while international sales are anticipated to grow between 15% and 20%. Operating income is forecasted to be between 14% and 14.5% of adjusted sales, influenced by a 220 basis point tariff impact. The adjusted EPS outlook has been revised to between $2.34 and $2.48, up from the prior range of $1.96 to $2.02, driven by lower than expected tariff costs from China. Capital expenditures have been adjusted to approximately $50 million, down from an earlier estimate of $60 million.
In summary, Yeti Holdings’ earnings call reflected a balanced view of the company’s current standing and future prospects. While international growth and product innovation provide a positive outlook, challenges such as declining sales and tariff impacts remain. The company’s strategic initiatives and revised guidance suggest a cautious yet optimistic path forward.