Revenue: Increased 3% to $351 million. Coolers & Equipment Sales: Increased 17% to $140.2 million. Drinkware Sales: Decreased 4% to $205.6 million. Direct-to-Consumer Sales: Grew 4% to $196.2 million, representing 56% of total sales. International Sales: Grew 22% to $79.9 million. Gross Profit: Increased 3% to $201.3 million or 57.3% of sales. SG&A Expenses: Increased 6% to $166.2 million or 47.3% of sales. Operating Income: Decreased 11% to $35.2 million or 10% of sales. Net Income: Decreased 12% to $25.8 million or $0.31 per diluted share. Cash Position: Ended the quarter with $259 million in cash. Inventory: Decreased 9% year-over-year to $330.5 million. Total Debt: $77 million, compared to $81.2 million in the prior year. Store Openings: Opened 25th store in Short Hills, NJ, and 26th store in King of Prussia, PA.

Warning! GuruFocus has detected 1 Warning Sign with YETI.

Release Date: May 08, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

YETI Holdings Inc (NYSE:YETI) delivered high-quality growth with strong gross and operating margins in the first quarter of 2025. The company saw excellent performance in Coolers & Equipment and international business, showcasing the impact of product innovation and global expansion strategies. YETI Holdings Inc (NYSE:YETI) is on pace for a record number of new product releases in 2025, with over 30 new product introductions planned. The company has accelerated efforts to shift Drinkware production out of China, expecting 90% of US Drinkware capacity to be ex-China by the end of the year. YETI Holdings Inc (NYSE:YETI) continues to invest in global growth, with new teams and facilities in Japan, the UK, and Europe to support future expansion.

Negative Points

Drinkware sales decreased by 4% due to challenging market conditions in the US and supply chain diversification efforts impacting growth. The company expects a 300 basis point impact on growth for the year due to inventory supply disruptions from accelerated supply chain diversification. YETI Holdings Inc (NYSE:YETI) anticipates a decline in gross margins by approximately 450 basis points due to the impact of tariffs. Operating income decreased by 11% in the first quarter, with FX having a significant impact on operating income growth. The company revised its full-year sales outlook to increase between 1% and 4%, down from previous expectations, due to supply chain disruptions and potential consumer demand softness.

Q & A Highlights

Q: Matt, can you remind us of the number of new product introductions expected for 2025 and how that compares to 2024? Will this cadence continue into 2026 and beyond? A: We expect about 30 new products in 2025, compared to 24 in 2024. Despite supply constraints and shifts in our supply chain, we are committed to innovation and supporting the YETI brand. This increased cadence is something we plan to maintain as we continue to expand our product portfolio.

Story Continues

Q: Mike, regarding the $100 million tariff impact, how much of that is specific to China? A: Approximately 90% of the $100 million tariff impact is related to China, given the 145% tariff rate on Chinese imports. We are focused on diversifying our supply chain to reduce this exposure, aiming for less than 5% of our COGS from China by the end of the year.

Q: Can you elaborate on your outlook for the drinkware business and how you are addressing underperforming categories? A: We are diversifying our drinkware portfolio to address more use cases and reduce concentration risk. We expect the market to stabilize, and our product portfolio is well-positioned to meet durable demand. We are excited about upcoming innovations in hydration vessels and coffee-related products.

Q: How are you approaching pricing as part of your mitigation efforts against tariffs? A: Our primary focus is on shifting our supply chain out of China. We are also working with suppliers to manage costs. Our pricing strategy is targeted and thoughtful, ensuring prices remain stable and reflect long-term business positioning rather than short-term reactions.

Q: What are your plans for accelerating international growth, particularly in 2026 and beyond? A: We see significant opportunities in Europe and Japan. In Europe, we are focusing on demand creation and expanding our distribution network. Japan will serve as a bridge to the rest of Asia, and we are building a team to capitalize on opportunities in North Asia and Southeast Asia.

Q: Are you seeing any impact on international demand due to geopolitical tensions? A: We are closely monitoring the geopolitical landscape, but so far, we haven't observed any significant impact on demand. Our brand is well-positioned internationally, and our local teams ensure YETI remains relevant and connected to consumers in each region.

Q: How are you managing inventory amid supply chain disruptions, and how do you prioritize between DTC and wholesale channels? A: We are strategically managing inventory to support both DTC and wholesale channels. Some products will launch outside the US due to supply constraints, while others will be delayed to build sufficient supply. Our approach is to ensure broad channel support and maintain consumer presence.

Q: Can you provide more details on the drinkware supply chain diversification and its impact on inventory? A: We are expanding our supply chain footprint in Southeast Asia, leveraging existing production capabilities. This transition will lead to some inventory constraints, but we are focused on minimizing the impact on 2026 and beyond. We are also exploring opportunities to maintain lower inventory levels going forward.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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