Using part of its quarterly conference call with analysts as a platform for discussion on Yeti’s recently closed acquisition of Mystery Ranch, SGB Media was able to put together a few tidbits of information not previously reported in the market.
The big news is the company found the right person to manage the business as it is integrated into the Yeti family. With Mystery Ranch and its staff remaining in Bozeman, someone will need to be the conduit between corporate and the the new brand in the stable.
Yeti Holdings has hired Layne Rigney as head of softgoods, which will include oversight of the Mystery Ranch business recently acquired by the company.
Rigney was most recently a board member at Sea to Summit and Marucci sports, but shifted his full focus to the Yeti role in January. Prior, Rigney was CEO of Osprey Packs and president at Camelbak after earlier years at Franklin Resource Group, PowerBar and RockShox. He knows the industry.
Rigney also served on the Board of Directors for Outdoor Industry Association and Camber Outdoors, with experience driving industry-wide policy, sustainability efforts and increasing outdoor participation.
But the main focus on the call regarding Mystery Ranch was the reasoning and long-terms plans coming out of the deal. How do they justify the move?
“The team in Bozeman shares the Yeti commitment to superior design, driving innovation and supporting our communities with the best gear you can make,” stated Yeti President and CEO Matt Reintjes. “This range of mission-based outdoor and everyday designs will perfectly complement Yeti’s premium line of waterproof and everyday bags. I look forward to the coming seasons as we introduce this incredible range of bags and packs to our global audiences further opening our opportunity in the $9 billion plus premium bags category.”
Yeti also revealed that is had acquired Butter Pat Industries, which features a line of polished cast iron cookware.
“Regarding our acquisitions of Mystery Ranch and Butter Pat Industries, both transactions were completed in Q1 of this year, utilizing cash on hand for a combined consideration of $48.5 million,” shared company CFO Mike McMullen.
“We announced the Mystery Ranch acquisition and the Butter Pat acquisition really as expansionary in the product portfolio,” Reintjes noted. “So think about them as things that come in and they hit our product road map and help us continue to grow underneath this Yeti brand.”
Reintjes said the acquisitions provide unique opportunities to accelerate product innovation in bags and cookware, two categories with significant addressable market sizes and that are a natural fit for the Yeti brand.
“From a category perspective, we expect Coolers & Equipment growth to outpace drinkware growth due to two factors; first, having our full portfolio of soft coolers in 2024, and second, due to the incremental sales of Mystery Ranch products,” McMullen outlined. “Third, our sales outlook does assume approximately 200 basis points of growth from our recent acquisitions. However, as we integrate the products into Yeti, we do expect some interplay between the Mystery Ranch product line and the existing Yeti bags product line.”
From a channel perspective, Yeti said it expects balanced channel growth between wholesale and DTC.
“Over the last few years, you all have seen our DTC businesses grow much faster than our wholesale business. There are a few dynamics that are causing the channels to grow more in line with each other in fiscal 2024,” shared McMullen. “First, sales of Mystery Ranch products will have a higher mix of wholesale sales in year one. Mystery Ranch currently goes to market through four primary channels; direct, traditional outdoor retail, specialty, and international two-step distribution.”
During the Q&A portion of the call, Reintjes talked about acquisitions and the globalization of the business and the success they have had in these relatively early markets around the world and the markets that they are not currently operating. He said to add in their philosophy and approach to M&A as an innovation extension.
“I would say when we think about M&A, and we talk about it as product expansionary,” Reintjes reiterated. “Part of the thesis is the ability to leverage the halo of the Yeti brand, the commercial go-to-market platforms that we’ve built, and the global expansion we have. I think in the near term, I would expect us to operate these acquisitions, in particular, Mystery Ranch and Yeti in 2024, largely as they are, while we work on the integration. But as we think about forward road mapping I think the expectation is that the technology, the design, the talent and team that we’ll put behind really will be to build out a larger Yeti portfolio and take advantage of this front-end commercialization engine we have.”
Reintjes continued, “I think with each acquisition, there are also nuances and specifics, there are areas where the Mystery Ranch brand has incredible relevance and credibility and we’ll continue to stoke and foster that because I think that’s important for both storytelling, innovation, how we build out the overall portfolio. But really, when we think about M&A, it’s not the beginning of building a house of brand strategy. It’s really how we build underneath what we believe is the potential in the TAM (Total Addressable Market) for Yeti.”
As analysts followed up on the broader M&A strategy moving forward, there seemed to be a fairly big surprise when the deals, Mystery Ranch in particular, were announced. One analyst asked if there was an IP story behind some of the acquisitions; and would Yeti play a little softer in certain places because of the Mystery Ranch acquisition.
Reintjes replied, “I would say whenever we — and we talked a little bit about this, but whenever we look at M&A through the lens of product, which is really what we’re doing here, we’re looking for talent acquisition in what I would call technology or designs and kind of technology and designs in conjunction for what they bring that we think is a differentiated point of view that’s leverageable and that’s scalable. So when I think about the Mystery Ranch acquisition and when you think about the Yeti product portfolio today in bags, we have high-end waterproof, fully submersible packs that have been a wonderful part of the Yeti story. We’ve expanded into kind of higher end everyday packs.”
He said that Mystery Ranch really brings two things that are important.
“One, in packs, one is carry and the other one is access, how you use the product,” Reintjes detailed. “And there are some things around the Mystery Ranch designs that are protectable and have been protected that we really like around the carry and around the access and design that we think has the potential to be really ownable, scalable, identifiable as you think about building out the packs brand. So it is something that as we look at acquisitions, technology, design, talent are really the three big things because we are thinking about this like additions to our product development engine.”
Reintjes continued, “As it relates to the interplay between Yeti legacy bags and the Mystery Ranch packs, I think what Mike was expressing is we just don’t know exactly how they’ll interplay and kind of — when you do this, you create awareness around the category. And so as we bring those — that assortment together, there’s going to be some moving parts in there. There’s going to be some SKU rationalization, there’s going to be some price point rationalization, that’s going to be kind of building up that assortment. So I think we just went into the year with a little bit of being thoughtful about how we plan for it in year one. And then in year two, we expect to build out a more robust portfolio.”
Another question addressed what attributes from Mystery Ranch may carry over to the Yeti packs and bags; is there an opportunity to integrate the capabilities and characteristics of the Mystery Ranch packs into the Yeti line.
“Mystery Ranch is known for their carry systems,” Reintjes responded. “And what I mentioned earlier, and I believe [an earlier] question was carry and access are two hugely important things in driving differentiation in packs. And so we see with Layne’s leadership and the talent team we now have in Bozeman with the talent, incredibly talented team we have in Austin, the ability to really become not only a big player and a relevant player in outdoor broadly, but also everyday carry. And I think that’s where Mystery Ranch as a brand had made a little bit of move there, but their legacy history was really tied into those heavy hauling, heavy carry environments. And so that’s why we saw incredibly complementary and we think those technologies and those designs are leverageable and have more broad, more scalable application.”
The conversation turned back to comments about the balanced channel growth this year, and how should people think about the mix between DTC and wholesale looking longer-term; is the current mix the right way to think about the business or would Yeti expect to reaccelerate DTC relative to wholesale in 2025 and beyond?
“So we expect the two channels to grow relatively in line with each other this year, but there’s really one thing I’d call out. In year one of Mystery Ranch, we expect a higher mix of wholesale versus direct,” the CEO suggested. “So that’s one factor that is driving them to grow more in line with each other. But over the long term, we believe that DTC will grow faster than wholesale. And not only just with our investments in DTC across both e-commerce and corporate sales, strategic partnerships, stores, etcetera but also as we look outside the U.S. We don’t have that full complement of DTC channels in the other regions where we’re operating – Europe, Canada, Australia – so as we look to build out those other DTC channels within those new regions, we think that’s going to help drive faster growth in DTC over the long term.”
“I would just add one thing,” Reintjes said, perhaps forgetting that the Bozeman team and Dana Gleason have access to the call. “There’s nothing about those packs structurally that’s fundamentally different than Yeti packs and I think as we evolve and grow and fit to channels to market those are all part of our thesis on the opportunity that we see.”
Image courtesy Mystery Ranch
For more SGB Media coverage on the Yeti x Mystery Ranch acquisition, see below.
EXEC: Yeti Hires Layne Rigney to Oversee Softgoods and Mystery Ranch
