YETI Holdings’ Mixed Earnings Call: Growth Amid Challenges

Yeti Holdings ((YETI)) has held its Q1 earnings call. Read on for the main highlights of the call.

YETI Holdings’ recent earnings call presented a mixed outlook, reflecting both optimism and caution. The company is making significant strides in diversifying its supply chain and maintaining robust growth in its Coolers & Equipment segment and international markets. However, challenges such as declining drinkware sales, tariff impacts, and supply chain disruptions have led to a cautious outlook for the remainder of the year.

Coolers & Equipment Growth

YETI’s Coolers & Equipment segment continues to thrive, with sales increasing by 17% to $140.2 million in the first quarter. This marks the fifth consecutive quarter of double-digit growth, underscoring the segment’s strong performance and consumer demand.

International Sales Expansion

The company is experiencing significant growth in international markets, with sales outside the U.S. rising by 22% to $79.9 million in Q1. All regions have shown growth, particularly Europe, highlighting YETI’s successful global expansion strategy.

Supply Chain Diversification Progress

YETI is ahead of schedule in moving its drinkware production out of China, with expectations that 90% of U.S. drinkware capacity will be ex-China by the end of 2025. This strategic move is aimed at mitigating risks associated with geopolitical tensions and tariffs.

Strong Financial Position

The company ended the first quarter with a strong financial position, holding $259 million in cash. Inventory levels decreased by 9% year-over-year to $330.5 million, reflecting strategic inventory management.

New Product Innovation

YETI is planning an ambitious rollout of over 30 new products in 2025, surpassing the 24 new launches in 2024. This focus on innovation is expected to drive future growth and strengthen its market position.

Drinkware Sales Decline

Drinkware sales saw a decline of 4% to $205.6 million in the first quarter, affected by challenging U.S. market conditions and ongoing supply chain diversification efforts.

Tariff Impact

Tariffs are expected to have a significant impact, with an anticipated gross impact of approximately $100 million in 2025, primarily affecting products sourced from China.

Supply Chain Disruptions

YETI is facing supply chain disruptions that are expected to impact growth by approximately 300 basis points for the year. These disruptions are a result of accelerated supply chain diversification efforts.

Operating Income Decline

Operating income decreased by 11% to $35.2 million, or 10% of sales, in Q1. Foreign exchange fluctuations impacted operating income growth by approximately 600 basis points.

Reduced Full-Year Guidance

YETI has revised its full-year sales growth guidance to between 1% and 4%, down from previous expectations. This reduction is attributed to supply chain disruptions and potential weaker consumer demand.

Forward-Looking Guidance

YETI Holdings provided guidance for fiscal year 2025, acknowledging both opportunities and challenges ahead. The company anticipates full-year sales growth between 1% and 4%, with gross margins projected at around 54%, down by 450 basis points from last year. Operating margins are expected to be approximately 12% of sales. Despite these challenges, YETI remains confident in its long-term growth strategy, focusing on product innovation, supply chain transformation, and operational discipline, setting a strong foundation for 2026.

In summary, YETI Holdings’ earnings call highlighted a mixed sentiment, with strong growth in certain segments and regions tempered by challenges in others. The company’s strategic initiatives in supply chain diversification and product innovation are promising, yet tariff impacts and supply chain disruptions pose significant hurdles. Investors will be keenly watching how YETI navigates these challenges while capitalizing on growth opportunities.