YETI Q1 2025 EPS Guide Cut to ~$2 on $100M China Tariffs
- Robust Innovation Pipeline: The company expects about 30 new products in 2025, with the pace of innovation set to increase in 2026 and beyond, underpinning a strong long‐term growth driver.
- Expanding International Opportunities: Significant momentum is noted in established international markets such as Europe and newly emerging markets like Japan, positioning YETI for accelerated global growth.
- Effective Supply Chain Diversification: The management’s proactive shift away from China to diversify production regions—particularly targeting Southeast Asia—should lower future tariff impacts, setting up improved operating margins and inventory efficiencies.
- Supply Chain Disruption Impact: The transition of Drinkware production out of China has led to supply disruptions (including a complete shutdown for over three weeks) and inventory constraints, which could slow product launches and negatively impact revenue growth.
- Margin Compression from Tariffs: The impact of tariffs—net of mitigation efforts—is expected to reduce gross margins by approximately 450 basis points and lower EPS guidance, putting pressure on profitability.
- Consumer Demand and Macro Uncertainty: There are concerns about weaker consumer demand and a volatile macro environment, with guidance suggesting potential softness in key U.S. channels that could adversely affect future sales.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | +2.8% | Total Revenue grew to $351.1M in Q1 2025 from $341.4M in Q1 2024, reflecting a composite improvement driven by gains in growing segments (notably Direct-to-Consumer and International) that helped offset the modest decline in the U.S. market compared to prior periods. |
Wholesale Revenue | +0.9% | Wholesale revenue edged up to $154.9M from $153.6M YoY, indicating a modest but stable improvement that builds on consistent demand and incremental increases from previous performance. |
Direct-to-Consumer Revenue | +4.5% | DTC revenue increased to $196.2M versus $187.8M, likely reflecting robust customer demand and the strength of key product categories—a trend seen in prior periods where category performance spurred growth. |
U.S. Revenue | -1.6% | U.S. revenue declined slightly to $271.3M from $275.8M, suggesting that domestic market challenges such as increased competition or market saturation, noted in earlier periods, continued to weigh on performance despite strong gains elsewhere. |
International Revenue | +21.8% | International revenue surged to $79.9M from $65.6M, demonstrating significant market expansion and improved demand in regions outside the U.S., a marked turnaround compared to previous milder performance. |
Net Income | +4.8% | Net income improved to $16.61M from $15.86M, benefiting from a combination of growing net sales and favorable non-operating items, even though operating income pressure persisted relative to previous periods. |
Operating Income | -16% | Operating income fell to $21.67M from $25.82M, primarily due to cost pressures such as tariffs and less favorable operating leverage despite higher sales, contrasting with prior periods where improved gross profit helped drive operating results. |
Earnings per Share (EPS) | +11% | EPS improved to $0.20 from $0.18, as a result of both the net income gain and a reduction in the weighted average shares outstanding compared to previous periods, increasing the earnings allocation per share. |
Net Cash from Operating Activities | Improved (less negative) | Net cash used decreased to $(80.3)M from $(103.7)M, driven by better working capital management through higher accounts payable and accrued expenses—an improvement over the prior period, despite some offsetting cash outflows from lower taxes payable. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Full-year sales growth | FY 2025 | 5% to 7% | no guidance provided [Q1 2025] | no current guidance |
SG&A leverage | FY 2025 | Approximately 10 basis points | no guidance provided [Q1 2025] | no current guidance |
Adjusted operating income growth | FY 2025 | 5.5% to 7.5% | no guidance provided [Q1 2025] | no current guidance |
Adjusted EPS growth | FY 2025 | 6% to 8%, reaching $2.90–$2.95 vs $2.73 | no guidance provided [Q1 2025] | no current guidance |
Operating income growth FX impact | FY 2025 | 350 basis point headwind | no guidance provided [Q1 2025] | no current guidance |
EPS impact (FX) | FY 2025 | $0.10 per share headwind | no guidance provided [Q1 2025] | no current guidance |
Effective tax rate | FY 2025 | Approximately 24.5% | no guidance provided [Q1 2025] | no current guidance |
Capital Expenditures | FY 2025 | $60 million to $70 million | no guidance provided [Q1 2025] | no current guidance |
Free Cash Flow | FY 2025 | Approximately $200 million | no guidance provided [Q1 2025] | no current guidance |
| Metric | Period | Guidance | Actual | Performance |
|---|---|---|---|---|
Total Net Sales YoY | Q1 2025 | 5% to 7% full-year sales growth | 2.8% YoY increase (341.4→ 351.1) | Missed |
Domestic Net Sales YoY | Q1 2025 | Mid single-digit domestic growth | –1.6% YoY change (275.8→ 271.3) | Missed |
International YoY | Q1 2025 | Mid-teens international growth | 21.8% YoY increase (65.6→ 79.9) | Beat |
Drinkware YoY | Q1 2025 | “Flat” growth in 1H 2025 for Drinkware | –4.2% YoY change (214.6→ 205.6) | Missed |
Operating Income YoY | Q1 2025 | 5.5% to 7.5% full-year operating income growth | –16% YoY change (25,817→ 21,671) | Missed |
EPS YoY | Q1 2025 | 6% to 8% full-year adjusted EPS growth ($2.90–2.95) | 11.1% YoY increase (0.18→ 0.20) | Beat |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Product Innovation Pipeline | Discussed robust innovation with 24 new launches in Q4 2024 , Drinkware and culinary expansions in Q3 2024 , and cooler innovation in Q2 2024. | Q1 2025 emphasized a record number of product introductions (over 30 new products), while noting that supply chain disruptions have delayed some launches. | **Positive innovation momentum with growing new product introductions, though supply chain challenges have a short‐term impact. ** |
International Market Expansion | Highlighted strong growth globally: 34% revenue growth in Q2 2024 , high growth in Europe and Australia in Q3 2024 , and significant European and Asian plans in Q4 2024. | Q1 2025 reported continued solid performance overseas (22% growth despite FX headwinds) and announced market entry into Japan as a gateway to Asia. | **Consistent global expansion with steady performance and active entry into new Asian markets despite FX headwinds. ** |
Supply Chain Diversification and Disruptions | Discussed ongoing diversification initiatives in Q2 2024 , progress with additional facilities and tariff mitigation in Q3 2024 , and active supply chain shifts with modest disruptions in Q4 2024. | Q1 2025 detailed accelerated diversification away from China, significant supply constraints, delayed product launches, and heightened tariff impacts. | **Increased focus on supply chain diversification with more pronounced disruptions and tariff challenges, though long-term benefits are expected. ** |
Margin Dynamics and Tariff Impacts | Mentioned limited details in Q2 2024 , improvements and rising concerns in Q3 2024 , and modest tariff impacts with recovery in Q4 2024. | In Q1 2025, margins are under pressure: gross margins fell by 20 bps, operating margins dropped by 11%, and a projected $100 million tariff impact was noted. | **Heightened margin pressures driven by tariffs and supply chain issues, prompting active mitigation steps. ** |
U.S. Domestic Market Demand Challenges | Q3 2024 acknowledged a more challenging U.S. market with discerning buyers and Q4 2024 reported cautious consumer behavior and increased promotions. | Q1 2025 reported a 4% decline in U.S. Drinkware sales, alongside supply constraints and a generally cautious consumer demand environment. | **Persistent domestic demand challenges with slightly worsening sentiment in Q1 2025 due to supply constraints and cautious buying behavior. ** |
Expansion into New Product Categories (Bags, Luggage, Packs) | Q2 2024 set the stage for a bags expansion , Q3 2024 highlighted strong performance in bags with new product lines , and Q4 2024 showcased landmark launches in bags and packs. | Q1 2025 continued the momentum with strong performance in bag products, including popular backpacks and totes, and a continued record innovation pipeline in this category. | **Strong and consistent positive momentum with ongoing expansion and innovation in bags, packs, and related categories driving future growth. ** |
Competitive Pressures and Promotional Intensity | Q3 2024 mentioned stable promotional cadence and Q4 2024 detailed heightened competition and promotional intensity, especially in Drinkware. | There is no mention of competitive pressures or promotional intensity in Q1 2025. | Topic dropped out in Q1 2025, which may indicate a reduced emphasis or a shift in focus amid other higher priority challenges. |
Macro Economic Uncertainty and Cautious Corporate Spending | Q2 2024 discussed macro uncertainties and cautious corporate spending with international expansions , and Q3 2024 noted a “choppy” market environment ; Q4 2024 reinforced cautious corporate spending. | Q1 2025 emphasized macro uncertainty with a choppy environment, cautious wholesale ordering, and guidance adjusted for potential consumer softness and tariff effects. | **Consistent concern over macroeconomic headwinds, with ongoing cautious corporate behavior and strategic adjustments to changing market conditions. ** |
Operational Concerns (Shortened Holiday Buying Season) | Q3 2024 raised concerns about a shortened holiday buying season and its potential impact on consumer behavior. | Not mentioned in Q1 2025. | **Topic is no longer mentioned in Q1 2025, suggesting a diminished focus or resolution of previous operational concerns related to holiday season timing. ** |
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Tariff Impact
Q: How significant is the China tariff hit?
A: Management explained that roughly 90% of the $100 million tariff impact is China-specific, illustrating the heavy tariff burden from China compared to other regions. -
Supply Chain
Q: How is Drinkware sourcing shifting?
A: They are diversifying production away from China to Southeast Asia, aiming for a run rate of less than 5% of COGS from China going forward, with improvements expected as the transition normalizes by 2026. -
EPS Guidance
Q: What drove the EPS reduction?
A: Management attributed the lower EPS outlook to supply disruptions—specifically a 300 basis point drag from inventory constraints and softer consumer demand, revising guidance to roughly $1.96–$2.02 from $2.73 previously. -
International Growth
Q: How will international demand be accelerated?
A: They highlighted strong performance in Europe and are launching in Japan as a gateway to Asia, supporting sustainable growth outside the U.S.. -
Drinkware Outlook
Q: What about underperforming Drinkware segments?
A: Management noted challenges with certain high-capacity products but remains optimistic, emphasizing ongoing portfolio diversification and upcoming innovations in hydration and coffee segments to drive durable demand. -
Product Innovation
Q: How will the product cadence evolve?
A: They plan to introduce about 30 new products in 2025, laying a foundation that will accelerate innovation into 2026 and beyond. -
Pricing Approach
Q: What is the strategy for pricing adjustments?
A: Rather than reactive price swings, management is taking a targeted approach, using strategic pricing alongside supply chain shifts to mitigate tariff impacts. -
Inventory Allocation
Q: How is inventory prioritized across channels?
A: Inventory is allocated based on available supply and launch schedules, balancing DTC and wholesale channels to best serve consumer demand amid constraints. -
Q2 Trends
Q: Are there any notable Q2 sales trends yet?
A: Management described the sales environment as choppy, with mixed signals across channels, and did not offer specific Q2 guidance.