YETI Holdings, Inc. Q2 FY2025 earnings call

• Acknowledged the Texas floods and supported relief efforts, including sales from the Texas Strong Tumbler benefiting recovery.
• Progress on strategic priorities: On track to open an Asia-based innovation center in Thailand, with strong product innovation momentum in bags/packs; international expansion thriving in Europe, Japan, Canada, and Australia; supply chain transformation underway to reduce China exposure to under 5% of COGS by year-end.
• Product innovation: Over 30 new products planned for the fiscal year, with strength in bags (e.g., Cayo backpack, Camino totes viral success); Drinkware focusing on sustainable innovation; Coolers & Equipment expanding with new soft coolers and chairs; global customer base broadened via partnership with Fanatics and presence at over 70 global events.
• Omnichannel performance: Wholesale had cautious ordering, direct-to-consumer had mixed results (Amazon strong, yeti.com conversion below expectations), and retail store openings slowed but focus on optimizing existing stores.

Drinkware: Sales decreased 4% to $236.4 million, accounting for approximately 53% of total sales. The U.S. Drinkware market was challenging due to a promotional environment and inventory constraints. Coolers & Equipment: Sales decreased 3% to $200.6 million. Hard coolers showed growth, but soft coolers were challenged; bags business gained traction. International: Sales outside the U.S. grew 2% to $78.1 million, representing ~18% of total sales. Europe had strong growth, Japan expanded distribution, and there was sustained demand in Canada and Australia.

• Full year sales expected flat to up 2% vs fiscal 2024. Drinkware expected flat to down low single digits in U.S. International sales expected to grow 15%-20%.
• Gross margins projected 56.5%-57%, up from prior guidance, due to tariff rate changes and cost efficiencies. EPS expected $2.34-$2.48. Capital expenditures revised to $50 million, free cash flow $150-$200 million.
• Phasing: Q3 expected flat to slightly positive vs last year; Q4 expected slight step up with growth in Drinkware and Coolers & Equipment.

• Macroscopic uncertainty and cautious consumer/retailer behavior impacting sales. - Tariff uncertainties affecting gross margins. - Supply chain transition challenges causing temporary inventory constraints and product availability issues.

Q: Phillip Blee on volume, price, and Camino totes A: Mike McMullen and Matt Reintjes discuss volume vs price impact, with volume more significant; Camino demand strong, bags business growth potential.

Q: Brooke Roach on innovation scaling and U.S. Drinkware inflection A: Matt Reintjes and Mike McMullen talk about innovation scaling, supply chain impact on new products, and U.S. Drinkware recovery expected in Q4.

Q: Randal Konik on sell-through vs sell-in and gross margins A: Mike McMullen discusses sell-through outpacing sell-in in U.S., international demand strength; gross margin outlook with focus on supply chain cost efficiencies.

Q: Randal Konik on innovation process change A: Matt Reintjes talks about focus teams, innovation centers, and open innovation enabling faster product development.

Q: Alexia Morgan on Drinkware promo and bags colorways A: Matt Reintjes discusses Drinkware promotional market dynamics and bags colorways reflecting broad-based demand.

Q: Joe Altobello on Q3 momentum and small categories A: Mike McMullen talks about Q3 positive momentum aligning with international growth outlook, small categories not indicating brand engagement.