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Investors witnessed Yeti Holdings (NYSE:YETI) taking a nosedive in early trading on Thursday after the company’s performance fell short of expectations in its Q4 earnings report, coupled with a cautious outlook for the future.
Missed Estimates and Financial Performance
Yeti reported a 16% year-over-year increase in Q4 net sales, with adjusted net sales growing 6%. Notably, the impact of recall reserves favored sales by $2.8M in the quarter but unfavorably affected sales by $38.4M in the prior year’s quarter. The sales growth was driven by a 12% increase in Drinkware net sales and a substantial 44% increase in International net sales.
Channel Sales and Profit Margins
The company disclosed that its direct-to-consumer channel sales, representing increased 11% to $344.9M in Q4, while wholesale channel sales surged by 26% to $174.9M. Sales of Coolers & Equipment rose by 26% to $165.0M. Adjusted gross profit stood at an impressive 60.2% of sales, up from 54.3% a year ago, indicating healthy bottom-line performance.
Guidance and Future Outlook
Looking ahead, the company expects full-year adjusted sales growth to range between 7% and 9%, accompanied by an annual EPS in the range of $2.45 to $2.50. This guidance, however, fell short of the $2.67 consensus, prompting concern among investors.
CEO’s Perspective
The CEO Nathan Dionne commented, “Given the uncertainties of the current environment, our outlook for 2024 balances a cautious approach with the ongoing opportunities that we see to drive growth through brand, product, and geographic expansion. We expect to see a positive reaction to innovation across our entire product portfolio in 2024. Sales are projected to grow across all of our categories, channels, and geographies. We expect both adjusted gross margin and adjusted operating margin expansion, as well as strong earnings per share growth, even as we continue to strategically invest in our teams and our business across the globe.”
Stock Movement
As a result of the earnings misfire, shares of Yeti Holdings (YETI) plunged by a significant 8.78% in premarket trading to $43.97. This sinking movement reflects investors’ concern regarding the company’s near-term prospects.
