Yeti Holdings reported flat sales in the third quarter as the company managed the voluntary recall of its soft-sided coolers.
Sales were $433.6 million for the quarter ended Sept. 30.
“Sales in the quarter were in line with our prior outlook, as a diverse range of new product offerings drove strong consumer demand across our major sales channels,” said Matt Reintjes, president and chief executive officer of Yeti.
In February of this year, Yeti issued a voluntary recall of its Hopper M30 Soft Cooler, Hopper M20 Soft Backpack Cooler, and SideKick Dry gear case.
Yeti started processing recall returns and claims during the second quarter of 2023.
“Our 2023 results have been materially adversely impacted by the stop sale of the soft coolers included in the recalls initiated during the first quarter of 2023,” Reintjes said.
In October 2023, Yeti introduced its redesigned and improved Hopper M30 Soft Cooler and Hopper M20 Soft Backpack Cooler and launched two new sizes with the Hopper M15 Soft Cooler and the Hopper M12 Soft Backpack Cooler.
“We believe the improved design of the Hopper M Series Soft Cooler line adequately addresses the potential safety concerns caused by the magnet-lined closures of the previous-generation products, which were affected by the product recalls,” Reintjes said.
Gross profit was $251.3 million, a 13% increase compared to the prior-year period. The increase in gross margin was primarily due to lower inbound freight costs and lower product costs, according to the company.
Net income was $42.7 million, a 6% decrease from the same quarter last year.
DTC Increases, Wholesale Down
Direct-to-consumer channel sales increased 14% to $259.5 million, compared to the prior year quarter, due to growth in drinkware, coolers, and equipment.
Wholesale channel sales decreased 16% to $174.1 million. This decrease was due to a decline in coolers, equipment, and drinkware sales.
For fiscal year 2023, Yeti expects sales to increase approximately 4%. Previously the company had forecast a 4%-5% revenue increase. The adjusted guidance is due to the recalled products.
Adjusted net income per share is projected to be $2.32, versus the previous outlook of between $2.23 and $2.32.
“We remain committed to delivering our full-year sales outlook, while also updating our full-year adjusted EPS outlook to the high end of our prior range to reflect continued gross margin expansion,” Reintjes said.
“Finally, our balance sheet and our ability to generate strong cash flow will afford us a range of opportunities as we look to further expand the reach of the Yeti brand, open new markets, and drive shareholder returns.”