Solo Brands, the Grapevine, Texas-based parent company of Solo Stove, Oru Kayak, Isle, and Chubbies, saw a huge wholesale revenue increase in the fourth quarter of 2022.
The company reported wholesale fourth-quarter revenue up 196.4% from the year-ago period to $36.5 million.
Net sales increased 11.8% from a year earlier to $197.2 million.
The increase was driven by wholesale demand and market penetration, according to the company.
“Our fourth-quarter and full-year 2022 results surpassed our expectations and showcased our differentiated model that delivers top-line growth with solid adjusted EBITDA and positive free cash flow,” said John Merris, CEO of Solo Brands, in a statement.
Gross profit increased 22.9% to $318.2 million, compared to $258.9 million in the prior year. Adjusted gross profit increased 20.2% to $326 million, compared to $271.3 million in the prior year. Gross margin decreased 2.7% to 61.5%.
Direct-to-consumer revenue decreased 2.1% to $160.8 million compared to $164.2 million in the fourth quarter of 2021.
On the company’s earnings call, Merris said in 2022 the company launched more new products than any other year in its history.
He highlighted the company’s portable pizza oven, which he said can cook homemade pizzas in less than two minutes.
The company’s tabletop fire pit was also launched in late summer and was a response to customers asking for an outdoor fireplace that can be used in more spaces, according to Merris.
“I hope it is obvious how core new product innovation is to our business and how important we believe it is to our long-term success,” he added.
Another key area of opportunity for 2023 is expanding the company’s retail partners, Merris said.
“We want to be where our customers need and want us to be,” he added.
Merris listed Dick’s Sporting Goods, ACE Hardware, Academy Sports + Outdoors, Scheel’s, and Costco all as “solid partners.”
The company’s sales channel mix was about 80-20 between direct-to-consumer and wholesale.
“We believe this shift and stronger alignment with strategic retailers will significantly accelerate brand exposure and market penetration,” Merris added.
The company has watched how Chubbies has worked with Dick’s and learned from that partnership to strengthen the presence of its other brands, Solo Stoves, Isle, and Oruk Kayaks, and expand its footprint within the stores, according to Merris.
“You’re seeing more product out there and they’re carrying more SKUs,” he said.
While the company would like to go wider and deeper with its existing retail partners, it also has an eye on selective and strategic new partners.
“It’s important to us that we don’t overextend here, or bring on the wrong partners that aren’t going to be brand-lifting to us,” according to Merris. “So you can expect us to be disciplined.”
Solo started to see strong momentum in its international markets in the second half of the fourth quarter, according to Merris.
“We have significant growth opportunities in our existing countries and we plan to launch localized e-commerce stores and additional new markets this year,” he added. “We still believe that in the long term our international business has the potential to become the same size as our U.S. business.”
The company’s SKU mix looks similar overseas as it does in the U.S., but it typically lags the domestic market, Merris said.
As far as consumer buying patterns, Solo has been tracking customers purchasing from more than one brand.
“We see Chubbies customers coming over and becoming Solo’s customers. We also see those those customers converting over and becoming Chubbies customers,” Merris said.
But, more importantly, the company has been focused on becoming more efficient within the brands themselves.
“So while we’re seeing some crossover in some lists, it just ultimately hasn’t been the highest priority because we’ve seen better gains in driving marketing efficiency within the brands and focusing on driving, for instance, a repeat purchase within Solo or repeat purchase within Chubbies,” Merris said.
However, Merris tempered his comments by pointing out the uncertain macroeconomic environment, including high inflation.
To react to those consumers looking for a deal, Solo has tried not to pass along the cost of inflation to the customer, according to Merris.
“In an environment like this, where [consumers are] really, really tight and pinching every dollar and making it stretch, we like the position we’re in from an overall pricing and promotional perspective,” he added.
The company expects total revenue to be between $520 million to $540 million for 2023.
Bart Schaneman can be reached at email@example.com.