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    Yeti Holdings Inc (YETI)

    YETI Q1 2025 EPS Guide Cut to ~$2 on $100M China Tariffs

    Reported on May 8, 2025 (Before Market Open)
    Pre-Earnings Price$27.93Last close (May 7, 2025)
    Post-Earnings Price$28.64Open (May 8, 2025)
    Price Change
    $0.71(+2.54%)
    • 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.
    MetricYoY ChangeReason

    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.

    MetricPeriodPrevious GuidanceCurrent GuidanceChange

    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

    MetricPeriodGuidanceActualPerformance
    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
    TopicPrevious MentionsCurrent PeriodTrend

    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. **

    1. 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.

    2. 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.

    3. 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.

    4. 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..

    5. 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.

    6. 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.

    7. 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.

    8. 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.

    9. 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.