Yeti Holdings, Inc. reported first-quarter results that topped analyst estimates but lowered its outlook for the year due to the projected impact of tariffs and supply disruptions.

Matt Reintjes, president and chief executive officer, commented, “A strong start to 2025 showcased our growing global brand and broadening product portfolio alongside the operational execution that has been a hallmark of Yeti. We exited the first quarter on our full-year plan before the significant tariff disruption announced in April. As we now look at the changing macro and consumer environment, we remain confident that our durable balance sheet and strong gross and operating margins will allow us to continue to drive innovation, supply chain transformation and global expansion during this time.”

First Quarter 2025 Sales Summary

  • Sales and adjusted sales increased 3 percent to $351.1 million, compared to $341.4 million during the same period last year. The 3 percent sales and adjusted sales increase included an FX headwind of approximately 100 basis points.
  • Direct-to-consumer (DTC) channel sales increased 4 percent to $196.2 million, compared to $187.8 million in the prior year quarter, primarily due to growth in Coolers & Equipment.
  • Wholesale channel sales increased 1 percent to $154.9 million, compared to $153.6 million in the same period last year, primarily due to growth in Coolers & Equipment.
  • Drinkware sales decreased 4 percent to $205.6 million, compared to $214.6 million in the prior year quarter. Drinkware performance was driven by growth in international regions that was more than offset by a decline in the U.S. region. Drinkware performance was also impacted by a challenging year compared to a 13 percent growth in the prior year quarter, as well as the strategic shift to prioritize supply chain diversification over innovation during the current year quarter.
  • Coolers & Equipment sales increased 17 percent to $140.2 million, compared to $119.9 million in the same period last year, due to growth in U.S. and international regions, driven by strong performance in bags and hard coolers.
  • Sales in the U.S. decreased 2 percent to $271.3 million, compared to $275.8 million in the prior year quarter. International sales increased 22 percent to $79.9 million, compared to $65.6 million in the prior year quarter. The 22 percent increase in international sales included an FX headwind of approximately 500 basis points.

Income Statement Summary

  • Gross profit increased 4 percent to $201.7 million, or 57.4 percent of sales, compared to $194.8 million, or 57.1 percent of sales, in the first quarter of 2024. The 30 basis point increase in gross margin was primarily due to lower product costs and the absence in the current year quarter of purchase accounting inventory step-up amortization, partially offset by a lower mix of our Drinkware category and the unfavorable impact of foreign currency exchange rates.
  • Adjusted gross profit increased 3 percent to $201.3 million, or 57.3 percent of adjusted sales, compared to $196.4 million, or 57.5 percent of adjusted sales, in the first quarter of 2024. The 20 basis point decrease in adjusted gross margin was primarily due to a lower mix of our Drinkware category and the unfavorable impact of foreign currency exchange rates, partially offset by lower product costs.
  • Selling, general, and administrative (SG&A) expenses increased 7 percent to $180.1 million, compared to $169.0 million in the first quarter of 2024. As a percentage of sales, SG&A expenses increased 180 basis points to 51.3 percent from 49.5 percent in the prior year period. This increase was primarily due to higher general and administrative expenses and higher employee costs, including investments in headcount to support future growth.
  • Adjusted SG&A expenses increased 6 percent to $166.2 million, compared to $156.8 million in the first quarter of 2024. As a percentage of adjusted sales, adjusted SG&A expenses increased 140 basis points to 47.3 percent from 45.9 percent in the prior year period. This increase was primarily due to higher general and administrative expenses and higher employee costs, including investments in headcount to support future growth.
  • Operating income decreased 16 percent to $21.7 million, or 6.2 percent of sales, compared to $25.8 million, or 7.6 percent of sales, during the prior year quarter.
  • Adjusted operating income decreased 11 percent to $35.2 million, or 10.0 percent of adjusted sales, compared to $39.6 million, or 11.6 percent of adjusted sales, during the same period last year. The 11 percent decrease in adjusted operating income included an FX headwind of approximately 600 basis points.
  • Other income of $1.4 million compared to other expense of $4.1 million in the first quarter of 2024, primarily due to unrealized foreign currency gains related to intercompany balances in the current year quarter versus foreign currency losses on intercompany balances in the prior year quarter.
  • Net income increased 5 percent to $16.6 million, or 4.7 percent of sales, compared to $15.9 million, or 4.6 percent of sales in the prior year quarter; Net income per diluted share increased 11 percent to 20 cents, compared to 18 cents in the previous year quarter.
  • Adjusted net income decreased 12 percent to $25.8 million, or 7.3 percent of adjusted sales, compared to $29.3 million, or 8.6 percent of adjusted sales in the prior year quarter. Adjusted net income per diluted share decreased 9 percent to 31 cents, compared to 34 cents per diluted share in the prior year quarter. Adjusted net income per diluted share included an FX headwind of approximately 2 cents or 600 basis points of growth.

“Yeti’s strong free cash flow generation and balance sheet provide us the flexibility to navigate this highly fluid trade environment,” Reintjes continued. “Our strategic supply chain diversification efforts are ahead of plan, and, as previously indicated, we are aggressively diversifying our sourcing out of China. As a result, we expect that by the end of 2025, we will have limited exposure to future goods sourced from China. So, going forward, less than 5 percent of our total cost of goods will be related to products from China for the U.S. market.”

Balance Sheet Summary

  • Cash was $259.0 million, compared to $173.9 million at the end of the first quarter of 2024.
  • Inventory decreased 9 percent to $330.5 million, compared to $363.9 million at the end of the prior year quarter.
  • Total debt, excluding finance leases and unamortized deferred financing fees, was $77.0 million, compared to $81.2 million at the end of first quarter of 2024.

Updating 2025 Outlook In Response to Tariff Impacts

Reintjes continued, “Our updated full year outlook reflects both our confidence in the business and our current assessment of anticipated headwinds this year, including the projected impact of tariffs and supply disruptions. Absent the tariffs, we believe Yeti was set up for a strong year of delivering against our full-year plan. In light of this, the focus still remains on our strategic priorities of growing the brand globally and driving innovation, all supported by consistent operational discipline.

“Despite a more complex macro environment than we faced at the start of the year, we remain focused on execution and positioning Yeti for long-term, sustainable growth by accelerating the pace of product innovation and materially transforming our supply chain to reduce reliance on China, while maintaining strong operating discipline to protect our fortress balance sheet. Alongside the strength of our balance sheet, our ability to generate cash is intact, even with the disruption from expected tariff impacts. We believe these factors, along with the durability of our brand, will enable us to successfully navigate 2025 and emerge even stronger in 2026.”

For Fiscal 2025, a 53-week period, compared to a 52-week period in Fiscal 2024, Yeti expects:

  • Adjusted sales to increase between 1 percent and 4 percent (versus the previous outlook of between 5 percent and 7 percent). The reduction in our adjusted sales outlook includes an approximately 300 basis point impact, primarily related to inventory supply disruptions in connection with the acceleration of our supply chain diversification efforts.
  • Adjusted operating income as a percentage of adjusted sales of approximately 12.0 percent (versus previous outlook of 16.9 percent). This outlook reflects an approximate 450 basis point impact from higher tariff costs and includes its ongoing mitigation efforts.
  • An effective tax rate of approximately 26.0 percent (versus the previous outlook of 24.5 percent; compared to 24.5 percent in the prior year period).
  • Adjusted net income per diluted share between $1.96 and $2.02 (versus previous outlook of between $2.90 and $2.95). This outlook reflects the impact of higher tariff costs, as well as the effects of lower topline related to inventory supply disruptions.
  • Diluted weighted average shares outstanding of approximately 83.7 million (versus previous outlook of 84.3 million).
  • Capital expenditures of approximately $60 million (versus previous outlook of between $60 million and $70 million), primarily to support investments in technology, new product innovation and its supply chain.
  • Free cash flow between $100 million and $125 million (versus previous outlook of $200 million). The decrease from its previous outlook reflects the impact on its topline from supply chain disruption and higher tariff costs.

Image courtesy Yeti Holdings, Inc.