Q3 2023 YETI Holdings Inc Earnings Call
Good morning, and welcome to the Yeti Holding's third quarter 2023 earnings conference call.
All participants will be in listen only mode should you need assistance. Please signal conference specialist by pressing the star key followed by zero.
After today's presentation there'll be an opportunity to ask questions. Please note. This event is being recorded.
I would now like to turn the conference over to Tom Shaw, Vice President of Investor Relations. Please go ahead.
Good morning, and thanks for joining us to discuss Yeti Holdings' third quarter 2023 results.
Leading the call today will be Matt Righteous, President and CEO and Mike Mcmillin CFO.
Following our prepared remarks, we'll open the call for your questions.
Before we begin we'd like to remind you that some of the statements that we make today on this call may be considered forward looking and such forward looking statements are subject to various risks and uncertainties that could cause our actual results to differ materially from these statements.
For more information please refer to the risk factors detailed in our most recently filed Form 10-Q.
And the form 8-K filed with the SEC today.
We undertake no obligation to revise or update any forward looking statements made today as a result of new information future events or otherwise.
As required by law.
Unless otherwise stated our financial measures disclosed on this call will be on a non-GAAP basis, we use non-GAAP measures as we believe they more accurately represent the true operational performance and our.
Results of our business.
Reconciliations of these non-GAAP measures to their most directly comparable GAAP measures are included in the press release or in the presentation posted this morning to our Investor Relations section of our website at <unk> Dot com.
And now I'd like to turn the call over to Matt.
Thanks, Tom and good morning, everyone Yeti posted another strong quarter and continues to build momentum with our brand and products, particularly when compared to a very strong year ago period that included the full benefit of our soft cooler lineup as well as strong wholesale replenishment.
Further highlighting our reported results. We also saw the strength of our brand and our point of sale data with consumer demand meaningfully outpacing our reported sales.
While we expect consumers to continue to be more discerning with spend.
We've seen the positive signs that they are highly receptive to new products.
Leaning into this dynamic has been a key driver of our business year to date.
In particular, we have seen the success of category expansion in cargo and drink ware, reaching both new and existing customers.
Combined with the new product this quarter showed well in our power King can't breathe in cosmic lilac color ways.
Our data insights and analytics would indicate that these launches continue the positive trend we have seen the growth of our acquisition and retention of female consumers across a range of age groups comp.
Complementing the balanced demographic makeup of yeti across genders household incomes and regions.
Beyond the top line or gross margin was a clear positive story this quarter showcasing the power of the brand.
We delivered remarkably strong gross margin expansion of nearly 650 basis points higher.
Highlighted by the ongoing recovery of inbound freight costs and favorable product costs.
This result further supports our efforts to stay on offense with brand and growth investments, while also taking care of the bottom line.
As we executed our financial plan during the quarter, we were focused on several key initiatives to start we successfully reintroduced our M series soft coolers at the beginning of the fourth quarter.
This included the return of the M 20, backpack and M 30 code as well as the new smaller <unk> backpack and then 15.
The third product impacted by the voluntary recall the psychic dry it returned to our DTC channel at the end of October.
Importantly, these product families will continue to build in the quarters ahead, as we more fully position inventory across channels expand color ways and add new sizes.
For example, we introduced a limited release, all black colourway across many of our coolers and bags in the current quarter, while two additional sidekick dry sizes are planned early next year.
We also built upon our omni channel capabilities and reach in the third quarter, including the debut of drink part customization in Australia through our E Commerce site and more recently similar capabilities in Canada. These.
These consumer facing offerings have long been core to our U S business and are now part of our global offering.
We also opened three U S based retail stores during the quarter.
Most openings, we've had in a single period, bringing our total stores to 17.
Finally, starting at the end of October we began a new partnership with tractor supply with an initial focus on their fusion doors.
GSE is unique national reach and strong heritage and farm and ranch provide what we see as highly complementary distribution to our existing channel.
Now, let me give a deeper look across our strategic growth priorities around brand product channel and geography.
Starting with brand yet he's diverse reach around the globe continues to show the strength of the connections we are making.
From fishing tournaments to Formula one races golf courses to food festivals.
It can be OS on Netflix to concert tours, a branded product were part of an integrated and global story in Q3.
The tradition of durability performance design and functionality the entire product and our brand. These connections to broad and diverse global communities are the backbone of our customer acquisition and retention efforts.
Keeping yeti top of mind and a powerful word of mouth strong.
Our 15 acted enthusiast communities and 180, plus top tier ambassadors continue to grow our audience isn't real connected meaningful ways, while also deepening our ties.
These relationships paved the way for continued product innovation and brand investment you need to yeti.
This quarter, we added global ambassadors and partners from Europe to Canada, Japan and from fishing to culinary.
Our diverse media coverage included names such as fast company food and wine parade variety GQ and outside showcasing the varied and connected ways in which product and brand seamlessly and naturally fit into culture without being forced upon the consumer.
Last quarter, we discussed the debut of our every single use campaign showcasing our product durability and contrasting yeti to single use disposable alternatives.
The campaign was so well received we expanded across major metropolitan areas and across 18 college campuses as well as internationally, providing a platform to reach new consumers, both domestically and abroad.
This is one example of the impactful and nuanced way in which we work consumers from awareness to consideration to purchase and repeat.
Looking at our product pipeline I mentioned earlier, the heightened importance of meeting a more discerning consumer with a reason to engage.
This is taking on even more important in today's marketplace.
And drink where the diversity of our portfolio has been key to driving growth year to date.
Viewed in evolve store design, creating what we believe is a strong balance of commerce and brand.
Leveraging a similar format, our new store in Honolulu set a first day sales record in just the first two hours of operation.
We also piloted in store drink or customization and our original Austin, Texas store, which we are actively looking to expand to several additional store locations.
With opportunities to drive customer acquisition and awareness, we will continue to look to accelerate store efforts in the years ahead.
These stores continue to showcase the range and diversity of our evolving product portfolio and play a unique role for our entire omnichannel.
Yeti stores, not only drive purchase but as importantly, our data would suggest drive awareness education and consideration that benefits all of our channels.
Shifting to wholesale results remained varied across the channel. We saw some continued tight inventory management going into the second half of the year. However, our strong execution on demand creation and innovation supported good sell through overall.
As we continue to build with our existing wholesale partners. We also began late last month, the previously announced paced launch with tractor supply.
Yes. He has a strong heritage in the farm <unk> Ranch space and we see this as a great fit given tractor supply's unique scale and life out here strategy Tia.
TST delivers on all three of our long standing criteria when considering new dealers.
Reach new customers create new buying occasions, and enhance our existing portfolio of dealers.
A mix of coolers, <unk> equipment, and drink, where it will be available over time and approximately 800 of their remodeled fusion doors and on their website.
We will work closely with the TSA team as we look at further opportunities in 2024 and beyond.
Yeah.
International once again reached approximately 16% of our sales at our team and the brand performed very well.
We were very pleased to deliver double digit sales gains in all regions. While also building our localized awareness and scale.
Australia, New Zealand had a tremendous performance this quarter as mentioned Australia became the first international market to offer e-commerce strength, where customization.
We also drove a number of diverse brand activations across professional rugby on mountain snow sports and fishing.
In addition, our team executed a successful transition to a new distribution center in August, which will provide more flexibility for growth and our customization efforts.
In Europe, I had the opportunity to travel with our team and market during the quarter meet with our local partners and dealers and as importantly, see the brand come to life.
Even with relatively early stage brand awareness, we're seeing highly encouraging signs are actively accelerating a range of awareness efforts, particularly as we look at the U K, Germany, and the broader Doc region.
Operationally, we ramped our new distribution center in the Netherlands, this quarter to support growth and efficiency.
In Canada, our wholesale business continues to see strength in our larger accounts offset by softer independent trends.
Our DTC channel remains strong and is increasingly leveraging many of the same tools as the U S to drive experience and reach across e-commerce and corporate sales.
This included last week's debut of drink, where customization on Yeti dossier, and we expect added functionality in the quarters ahead.
Overall, <unk> performed well in the third quarter and is positioned to execute on Q4, while building for long term growth.
For the fourth quarter and beyond we will continue to focus on growing our global brand audience and an elevated cadence of innovation as we further extend our portfolio.
The strength of our financial flexibility also means we will remain on offense in this environment investing in global capabilities, driving our product roadmap building brand and thoughtfully allocating capital.
Finally, with the holidays and year end fast approaching I want to acknowledge and thank our amazing team and all our global partners for their ongoing support execution and commitment throughout the year.
I'll now turn the call over to Mike to discuss our results and outlook in more detail.
Thanks, Matt I'll begin with a review of our third quarter performance, followed by an updated outlook for the full year.
Our GAAP results reported in today's press release are inclusive of some minor charges and adjustments associated with the voluntary product recall.
This primarily includes slightly lower recall related costs versus what was assumed in our reserves.
We did not make any further adjustments to our <unk> reserve during the quarter as actual recall claim trends are generally in line with our assumptions, which we updated in the second quarter.
As is our normal practice all of the financial details and I will discuss on today's call are adjusted non-GAAP metrics.
Now onto our results.
Third quarter sales were flat year over year at $434 million the quarter included $6 $3 million of gift card redemptions related to remedies, we are offering customers impacted by the product recall.
Excluding these gift card redemption topline results for the period were in line with our outlook of a low single digit decline versus the prior year.
But similar to last quarter a portion of these gift card redemptions were used to purchase products with constrained supply, which impacted our ability to fulfill orders from customers in other channels.
Thus, we do not believe that the full amount of gift card redemptions are incremental to our results.
Overall, we were pleased with our sales performance in Q3, given several factors that impacted our top line growth.
First due to the product recall, we were without several of our top selling soft cooler products for most of the quarter, including during the key summer months.
Second as we discussed with you all last quarter, we did accelerate the launch of our fall seasonal colors in Q3, which.
Which drove a need to start shipping the product in the wholesale in Q2.
And third we faced a challenging compare as we posted a strong 20% total growth rate.
And a 25% growth rate for our wholesale channel.
In the prior year quarter.
As a reminder, last year, we benefited from a restocking of our product by the wholesale channel as the channel was able to get back to optimal stock levels. After a number of periods of constrained supply.
This had an impact across both <unk> and coolers <unk> equipment.
The most significant impact to hard coolers.
There are clearly a number of dynamics that have impacted our reported growth rate on a quarter to quarter basis. This year.
But one aspect of our business that we continue to be pleased with is the strong consumer demand that we have consistently seen across our major channels and product categories.
In the third quarter, we saw positive sell through growth in our U S wholesale channel across both drink wear and coolers and equipment.
From a channel perspective direct to consumer sales grew 14% to $259 million, representing 60% of total sales.
Growth within DTC was led by our Amazon business, including a highly successful Prime day.
So we also saw a sequentially higher growth rates in each of our other <unk> businesses.
In our E Commerce business as Matt said, we saw exceptional growth in new and returning customers as.
As well as strong growth in the overall number of transactions. However, this was partially offset by a lower average order value in Q3 versus the prior year quarter.
At a product category level in DTC, we saw strong performance in cargo drink wear in hard coolers, which more than offset the impact of the recall and soft coolers.
Wholesale sales decreased 16% to $174 million with declines in both coolers <unk> equipment and drink Ware.
As discussed the decline was driven by the impact of the recall and soft coolers and a significant sell in comparison versus the prior year.
However, as I mentioned, we were very pleased with our growth on a sell through basis.
By category in coolers, <unk> equipment sales decreased 8% to $172 million driven by the factors that I have outlined that impacted hard cooler and soft cooler sales.
Your line of go boxes have outperformed expectations since their first quarter launch and we're excited to see both color and distribution expansion during the quarter.
Banks were also supported by color with Cam Green in cosmic lilac, both contributing to growth across our crossroads collection.
And soft coolers as Matt mentioned, we reintroduced our newly designed in series soft coolers to the market in early Q4.
In order to help support the launch we did begin the initial shipments of these products into a portion of our wholesale channel in late Q3.
This was contemplated in the outlook that we communicated to you all last quarter.
Despite not having a full assortment yet we are pleased with the early results from the launch of these important products.
<unk> sales increased 6% to $253 million with growth in DTC offsetting a decline in wholesale.
We continue to see our innovation and drink, where resonate with consumers and put us in a position to capitalize on trends in the market.
For instance, we expanded our yonder product lines with new sizes, and lid offerings and launched new color Max Lids, and our Rambler stainless bottle line.
In addition, we had incredibly successful fall color launches and campaign cosmic lilac empower pink.
We also remain encouraged by some of the initial success. We are seeing as we look to move beyond individual use drinking vessels into more group sharing and entertaining options.
As Matt outlined earlier, we think we can further capitalize on these trends in Q4 with our extensive lineup of new innovation.
This includes an expanded range of products designed for a coffee occasions with three smaller sized cups and mugs.
Great New hydration solution with the Rambler 42, our strong margins.
And the introductions of new entertaining options with the yeti cocktail Shaker and wine cellar.
Internationally sales grew 20% to $68 million, representing nearly 16% of total sales with double digit gains across all three regions, Europe, Australia and Canada.
Gross profit increased 13% to $250 million or <unk> 57, 8% of sales compared to 51, 3% in the same period last year.
Positive drivers this quarter included 480 basis points from lower inbound freight.
150 basis points from lower product costs.
110 basis points from favorable channel mix and 20 basis points from all other impacts.
These gains were partially offset by 110 basis points from higher promotion associated with our successful Amazon Prime day.
SG&A expenses for the quarter increased 20% to $179 million or 41, 3% of sales compared to 34, 4% in the same period last year.
Non variable expenses increased 370 basis points as a percent of sales driven by a rebuild of incentive compensation costs for our employees.
<unk> investments in areas, such as head count and demand creation to support our future growth.
And the impact of the recall on our topline.
Variable expenses increased 320 basis points as a percent of sales primarily driven by two factors.
One we had higher Amazon marketplace fees, given the higher growth in this channel.
We had higher outbound freight expenses in Q3, given the growth and the corresponding increase in sales mix of our overall DTC business in.
In addition, outbound freight costs were also driven higher in the quarter by the dynamic of smaller average order sizes and E Commerce, which I mentioned earlier.
Operating income decreased 3% to $71 million or 16, 5% of sales compared to 16, 9% during the same period last year.
Net income also decreased 3% to $53 million or <unk> 60 per diluted share compared to <unk> 63 in the prior year period.
Turning to our balance sheet, we ended the third quarter with $281 million in cash compared to $78 million in the year ago period.
Inventory decreased 22% year over year to $341 million.
After four straight quarters of sequential declines inventory did increase from Q2 to Q3 by $19 million as we enter our seasonally highest sales quarter.
Total debt, excluding unamortized deferred financing fees, and finance leases with $83 million compared to $96 million at the end of last year's third quarter during.
During the quarter, we made a principal payment of $1 million on our recently amended term loan.
Now turning to our updated fiscal 2023 outlook.
We now expect full year sales of approximately $1 7 billion representing growth of approximately 4% compared to fiscal 2020 twos adjusted net sales.
While remaining in the range of our prior outlook our updated estimate reflects a number of factors.
First it reflects the benefits of strong overall demand across our channels.
At the same time, we do expect to see the continuation of several recent trends.
Cautious ordering patterns in the wholesale channel somewhat tempered growth in corporate sales following a very strong 2022.
And lower average order values and e-commerce.
Notably our work to establish our tractor supply partnership has been in process since earlier in the year and was the best contemplated in our prior outlook.
Looking specifically at the fourth quarter. This updated outlook implies approximately 10% sales growth, which puts us back in the range of our long term growth algorithm.
This includes more balanced category growth between drink wear in coolers <unk> equipment.
Supported by new innovation and drink Ware, and the launch of our soft cooler products impacted by the recall back into the market.
By channel, we expect to maintain double digit growth in DTC.
Returning to growth at wholesale from.
From a mix perspective, we still expect DTC sales mix of approximately 60% for the year.
As a final point on our sales outlook consistent with last quarter. This outlook does not include the impact of any gift card redemptions in the fourth quarter.
Our gross margins continue to improve and thus we are increasing our full year gross margin outlook to approximately 56, 5%.
<unk> to 52, 7% in fiscal 2022.
This is driven by the combined impacts of lower inbound freight costs and favorable product costs.
Year over year gross margin expansion is expected to moderate somewhat from the third quarter to the fourth quarter due to a more normalized mix benefits as well as the overall strength of Q3 gross margin.
On the SG&A line, we expect full year SG&A dollar growth to approach the high teens level.
As we have outlined throughout the year, our SG&A growth in fiscal 2023 is being driven by investments to support our future growth.
Incentive compensation and variable expenses to support our DTC businesses.
Our fourth quarter growth rate in SG&A is expected to be in the range of our year to date results.
With these updates we now expect an operating margin of approximately 16% for the year at the high end of our prior range.
For the fourth quarter, we continued to expect a return to over 20% operating margin.
Inclusive of approximately $2 million in interest expense and an effective tax rate of 25, 1% are.
Our full year earnings per diluted share is now expected to be approximately $2 32.
Which is the high end of our prior outlook.
For cash we now expect free cash flow of approximately $200 million at the high end of our prior outlook with capital expenditures of approximately $55 million down $5 million from our prior outlook.
Overall as we enter the fourth quarter, we are pleased with our execution. Thus far this year, while our growth rate. This year is not where we expect it to be going forward. It is in the range of what we set out to do at the beginning of the year given the impact of the recall.
Our gross margins continue to recover to the levels, we saw before the run up in inbound freight costs.
And our balance sheet, along with our ability to generate good cash flow continues to be a strength.
While we are certainly mindful of the ongoing uncertainties with the consumer and macro environment, we remain optimistic as we move closer to the holidays.
We believe we have an incredibly exciting lineup of new products in the market.
And we believe the yeti brand is as powerful as ever.
Now I would like to turn the call back over to the operator to take your questions.
Thank you we will now begin the question and answer session.
Ask a question you May press Star then one on your Touchtone phone.
If youre using a speakerphone please pick up your handset before pressing the keys to withdraw your question. Please press Star then two.
In the interest of time, please limit yourself to one question and one follow up at this time, we'll pause momentarily to assemble our roster.
Our first question comes from <unk>.
Peter Keith from Piper Sandler. Please go ahead.
Hey, good morning, everyone.
Thanks for taking the questions.
I guess, it's encouraging to see that you called out sell through was positive at wholesale for the quarter, but I guess everyone's kind of nervous on the consumer and maybe some worried about some slowdown overall in September and October.
You are lowering a little bit on the sales guide could you give us a sense on maybe the sell through in overall sales trends how they progressed in recent months.
Good morning, Peter Thanks, Thanks for the question.
I would say.
We feel very good about the quarter, we just posted we talked.
Both Mike and I commented on the strength of the sell through.
The strength of our ability to not only acquire but retain consumers.
In a competitive environment for consumer attention and I think thats a mix of the strength of the brand.
Our product portfolio that we have the products that we continue to innovation, we continue to bring out.
As we look into Q4.
Those those same dynamics, we're focused on driving customer acquisition and customer retention.
Making sure that we're top of mind as people go into this important holiday season, and as you've seen following story excuse me for a while that is that's something that yeti has consistently done done in the fourth quarter I think that even with a more discerning consumer.
The data that we saw in Q3 and what we expect in Q4 as it will continue to be prominent during the holiday season.
Okay, that's great.
Just I know youre not guiding to next year, but one.
Thesis, that's being floated around is that even though you are lapping that recall with all the various puts and takes as happened in 2023 that you don't really have an easy compare so we look out to next year.
I guess, just how do you think about the underlying trends as we pivot from 2023 to 2024 and lap the recall.
Yeah, Hey, Peter so.
Couple of things I'd say.
Yes.
Number one is we as we look to next year.
We'll have more to say on 2024 on our next earnings call, but just at a high level.
What really is encouraging for us like Matt said that the overall strength of the brand and expansion of the brands.
As we look at other opportunities for us to continue to grow just the consumer demand strength that we've been seeing.
The growth outside the U S that we believe is an opportunity for us.
Speaker 1: leave is an opportunity for us.
Speaker 1: Getting our full portfolio back with the M-Series and the Sidekick Dry coming back to the market.
Getting our full portfolio.
Back with the M series, and the sidekick dry coming back to the market.
Speaker 1: If you look at the innovation that we've launched in the second half of this year, being able to annualize that. Thank you.
If you look at the innovation that we've launched in the second half of this year being able to annualize that.
Speaker 1: the new customers that Matt talked about that we acquired.
New customers that Matt talked about that we that we have.
Acquired.
Speaker 1: And what we typically see with those new customers coming in and us able to increase value with them over time. You know, we just, we believe that we have an opportunity to kind of get back to those growth levels that we've traditionally targeted and.
And what we typically see with those new customers coming in and us able to increase value with them over time.
We just we believe that we have an opportunity.
To kind of get back to those growth levels that we've that we've traditionally targeted.
Yes.
Speaker 1: then, you know, despite the, or even with the compare, we just think the opportunity is there for us.
And then.
Despite the or even with the compare we just think the opportunity is there for us.
Okay very helpful. Thanks, so much guys.
Speaker 2: The next question comes from Peter Benedict from Baird. Please go ahead.
The next question comes from Peter Benedict from Baird. Please go ahead.
Hi, Peter is your line on mute.
Speaker 1: it is. I apologize. Good morning everyone. So my first question is just on the new distribution agreement with Tractor Supply. How do you think about that from an incrementality standpoint? I mean you've already been in farm and ranch but clearly Tractor's the leader in that space. And how should we think about maybe that impact as you kind of move through next year? Any details or color you'd provide around that would be helpful. That's my first question.
Yes. It is I apologize good morning, everyone. So.
My first question is just on the new distribution agreement with tractor supply.
How do you think about that from an incremental standpoint, I mean, you've already been in farm <unk> ranch, but clearly tractors.
As a leader in that space.
How should we think about maybe that that impact as you kind of move through next year.
Any details or color you can provide around that would be helpful. That's my first question.
Hey, Peter Thanks, Thanks for the question.
Speaker 3: Hey, Peter, thanks. Thanks for the question. You know, Tractor Supply, we've known for a while, and we've watched and their names come up. We think they do a wonderful job in that farm and ranch community and in connecting to those consumers. You know, as we watched the evolution of their...
Our supply.
We've known for a while and we've watched and their names come up.
I think they do a wonderful job in that farm and ranch community.
And then connecting connecting to those consumers.
As we watch the evolution of their fusion store build out strategy one of the opportunities. We saw as we looked at the mapping of our distribution footprint and consistent with how we've always thought about distribution, whether we were taking our footprint down or selectively looking at opportunities to expand our foot.
Speaker 3: fusion store build out and strategy. One of the opportunities we saw is we looked at the mapping of our distribution footprint and consistent with how we've always thought about distribution, whether we were taking our footprint down or selectively looking at opportunities to expand our footprint.
Print.
Speaker 3: it's always around do we think we can intersect with a new consumer in a new buying occasion and is it complementary and incremental or kind of affords us a chance to reach people that fits with the rest of our distribution footprint and that includes our Amazon reach, our e-commerce reach and our wholesale partnerships.
It's always around do we think we can intersect with a new consumer.
In a new buying occasion, and as it is a complementary and incremental or or.
Kind of.
Affords us a chance to to reach people that fits with the rest of our distribution footprint and that includes our Amazon reached our e-commerce reach and our wholesale partnerships and <unk>.
Speaker 3: And when we map that out and looked at our analytics across, across all those different touch points.
When we map that out and looked at our analytics across across all those different touch points.
Speaker 3: There was a really nice overlay with where tractor supplies located today and where we think that business can play a role for us.
There was a really nice nice overlay with where tractor supply's located located today and where we think that business.
Can play a role for us So we're excited about the partnership.
Speaker 3: So, you know, we're excited about the partnership. As you've seen with us in the past, we're slow and paced in how we roll out these partnerships for the benefit of both parties and making sure that we do it the right way, that we get the right assortment, the right merchandising in the right stores. And we're in the very, very early days of that with Tractor Supply. But see the long-term potential there.
<unk> seen with us in the past, where we were slow and paced and how we roll out these partnerships for the benefit of both parties and making sure that we do it the right way that we get the right assortment the right merchandising in the right stores and we're in the very very early days of that with with tractor supply.
But see the see the long term potential there.
Speaker 4: That's helpful, thanks. And then I guess, Mike, maybe one for you. You talked about the SGA growth.
That's helpful. Thanks, and then I guess, Mike maybe one for you.
You talked about the SG&A growth.
High teens.
Speaker 4: you know, high teams, I mean, we get the variable components there, but how about the non-variable portion? How do we think about that as we're moving kind of into next year? I mean, this has been obviously a slower year on the top line, uh, but you've kind of forged ahead, uh, with, with a lot of investment within the P&L and SG&A. How should we think about maybe the cadence, um, uh, as we, as we move into 2024, uh, within your SG&A. Thank you.
I mean, we get the variable components, there, but how about the non variable portion how do we think about that as we're moving kind of into next year. I mean, this has been obviously a slower year on the topline.
Kind of forged ahead with a lot of investment within the P&L SG&A, how should we think about maybe the cadence.
As we as we move into 2024 within your SG&A. Thank you.
Speaker 1: Yeah, hey Peter, so I'd say a couple things. So I mean, like you talked about the big, you know, as we looked at our SG&A for the year, the non-variable piece is largely the same. What's been a tick higher versus, you know, some of our comments in prior quarters has really been that variable piece driven by some dynamics in the business. But the non-variable piece has been really consistent. And we said there's really been three primary drivers of that. One, incentive compensation.
Yeah, Hey, Peter So I'd say a couple of things so.
Like you talked about the big.
As we looked at our SG&A for the year.
The non variable piece is largely the same what's been a tick higher than versus some of our comments in prior quarters, its really been that variable piece.
Driven by some dynamics in the business, but the non variable piece has been really consistent we said, there's really been three primary drivers of that one incentive compensation.
Speaker 5: two, the impact of the stop sale, and three, the investments we're making.
The impact of the stop sale and three the investments we're making as.
Speaker 5: As we look to go to next year, two of those we believe are largely not going to be factors on an ongoing basis. The incentive compensation and the impact of the recall and the stop sale on our top line.
As we look to go to next year two of those we believe are largely not not going to be factors on an ongoing basis, the incentive compensation and the impact of the recall and the stop sale on our topline.
Speaker 1: We're always going to invest in our business and we continue to plan to do that next year, but it is our intent to over time get leverage on our op-ax, whether we'll have more to say on 2024 specifically when we get into our Q4 earnings call, but over time, we do believe that we can get leverage on our op-ax. It's just there were several discrete impacts this year that we believe will not continue as we go into next year. Okay.
We're always going to invest in our business and.
And we continue to.
Plan to do that next year, but but it is our intent to over time get leverage on our opex, whether we will have more to say on 2024, specifically when we get into our Q4 earnings call, but over time, we do believe that we can get leverage on our Opex. It's just there were several discrete impacts this year.
That we believe will not continue as we go into next year.
Okay fair enough. Thanks, so much guys. Good luck.
Speaker 6: Thanks Peter.
Thanks Peter.
Speaker 2: The next question comes from Megan Alexander from Morgan Stanley . Please go ahead.
The next question comes from Megan Alexander from Morgan Stanley. Please go ahead.
Hi, Thanks for taking our questions I guess, maybe a little bit of a follow up on the earlier question, but could you just help us unpack what's changing in the implied for Q wholesale guide I think if my math correct. It maybe implies wholesales up low single digit first double digit prior so.
Speaker 7: Hi, thanks for taking your questions. I guess maybe you know a little bit of a follow-up on the earlier question But could you just help us unpack what's changing and the implied for Q wholesale guide? I think if my mass corrected maybe implies Wholesales upload single digits first double digits prior. So, you know, is it possible to contextualize? Maybe how much of that was a benefit to the third quarter from early load in you know? and how much of it is what you're seeing in terms of
Is it possible to contextualize, maybe how much of that was.
To the third quarter from early load in and how much of it is just what youre seeing in terms of retailer replenishment and conservative retail ordering patterns.
Speaker 7: retailer replenishment and conservative retail ordering patterns.
Speaker 5: So, I'd say a couple things as we look to the fourth quarter. I would agree that the implied is that we said we wanted to get back to growth in Q4. That's coming off a Q3 where we had a pretty challenging compare in the prior year, Q3 also grew 25%.
So I'd say a couple of things as we as we look to the fourth quarter I E.
I would agree that the implied as we said we wanted to get back to growth in.
In Q4.
That's coming off.
Q3, where we had.
A pretty challenging compare in the prior year Q3 wholesale grew 25%.
Speaker 1: Which is a big part of the reason why, you know, what led to the results this quarter.
Which is a big part of the reason why.
What led to the results this quarter, but as we look to now we believe were at more normalized inventory levels.
Speaker 5: But as we look to, you know, now we believe we're at more normalized inventory levels.
As we look at warehouse sell through is performing being positive across both drink wear and see any.
Speaker 3: As we look at where health self-through is performing, the positive across both Drinkware and C&E, having the full complement of products available with the M-Series coming back. Um.
Having the.
Full complement of products available with the M series coming back.
Speaker 5: you know, we believe that that kind of leads us to kind of that, those growth levels that we communicated for Q4. At the same time, you know, we do believe that we are seeing a more cautious ordering environment.
We believe that that kind of leads us to kind of that.
Those growth levels that we communicated for Q4 at the same time, we do believe that we are seeing a more cautious ordering environment.
Speaker 5: It's not consistent across all dealers. Some dealers that we're seeing are doing really well with us.
It's not consistent across all dealers some dealers that we're seeing are doing really well with us.
Speaker 5: But it's just as we look at the environment and kind of how different dealers are looking at their outlook for the consumer. We felt like that was the.
But it's just as we look at the environment and kind of how.
Different dealers are looking at.
The outlook for the consumer we felt like that was the.
Kind of.
Speaker 5: what we see for the fourth quarter, but I think the most important thing is we continue to be encouraged by what we're seeing at a cell-through level and expect that to continue.
What we see for the fourth quarter, but I think the most important thing is we continue to be encouraged by what we're seeing at a sell through level.
Do you expect that to continue.
Okay. That's helpful. And then maybe just a follow up on the gross margin, obviously very impressive performance, even despite a pretty large promotion headwind from Prime day, I guess, how should we think about the bridge to <unk> and then to 24.
Speaker 7: And then maybe just to follow up on the gross margin, you know, obviously very impressive performance, even despite a pretty large promotion headwind from Prime Day. I guess, you know, how should we think about the bridge to 4Q and then to 24?
Speaker 7: you know would you expect freight and product cost to continue to build into 4Q and 24 and then I guess you know on the promotion piece presumably the Amazon Prime Day.
Would you expect freight and product cost to continue to build and to <unk> and 'twenty four and then I guess on the promotion piece, presumably the Amazon Prime day.
Speaker 7: headwind goes away, but how should we think about that promotion line more broadly? And is there an opportunity to perhaps lean into Amazon and promotion?
Headwind goes away, but how should we think about that promotion line more broadly and is there an opportunity to perhaps lean into Amazon and promotions and more earnest given what youre seeing from some of your retail partners.
Speaker 7: in more earnest given what you're seeing from some of your retail partners.
Yes, I'd say.
Speaker 5: Yeah, I'd say on Gross margins, we were obviously thrilled with the results that we posted in Q3.
On gross margins.
We're obviously thrilled with the results that we posted in Q3.
Speaker 5: As we looked to Q4, really nothing has changed on our outlook for Gross Martin in Q4 by itself. We took the year up, again this quarter, to 56, approximately 50,500.
As we look to Q4 really nothing has changed on our outlook for gross margins in Q4 by itself. We took the year up again this quarter to.
56, approximately 50.
Speaker 5: Really, the strength in Q3 is what led us to do that. Q4 is largely in line with what we've expected for the last few quarters.
<unk>.
Really the strength in Q3 is what led us to do that in Q4 is largely.
In line with with what we've what we've expected for the last few quarters.
Speaker 5: You know, on the product side, expect that to generally be in line with what we've been, what we've been posting. I would expect the benefit from inbound freight. I would not expect that to continue to build because in the prior year we started to see some of the benefits of the lower rate.
On the product Cogs side expect that to generally be in line with what we've been what we've been posting I would expect the benefit from inbound freight.
I would not expect that to continue to build because in the prior year, we started to see some of the benefits of the lower rates.
Speaker 5: You know, roll through our results and Q4 of the prior year, whereas Q2 and Q3 of last year were kind of the peak impact of. When we saw those, those, those higher rates, and if you look at at the drivers that we provided on a quarter quarter basis, you can see that the negative impact went down from Q3 to Q4 of last year. So I would not expect that line specifically to continue to build.
<unk> through our results in Q4 of the prior year, whereas Q2, and Q3 of last year were kind of the peak impact of Av.
When we saw those those those higher rates and if you look at the the drivers that we provided on a quarter to quarter basis, you can see that the negative impact went down from Q3 to Q4 of last year. So I would not expect that line specifically to continue to build.
Speaker 3: And Megan, I've just said one thing on the promotional cadence, you know, Yeti's been consistent in our approach to promotion and very selective as a primarily full price seller consistent across all of our channels to market. And we think that's one of the values is that we drive the value behind the brand and drive the demand behind the product.
I'd just add one thing on the promotional cadence yet.
Yes.
<unk> been consistent in our approach to promotion and very selective as a as a primarily full price seller are consistent across all of our all of our channels to market and we think thats. One of the values is that we drive to drive the value behind the brand and drive the demand behind the product.
Speaker 3: The way we've looked at promotion and it would be consistent with the way we would do in the future is you think about product transitions.
The way we've looked at promotion.
And it would be consistent with the way we would do in the future as you think about product transitions.
Selective things as we think about inventory inventory management on the margin and then.
Speaker 3: selective things as we think about inventory management on the margin and then, you know, really kind of optimizing and selective at a busy time of the year where you're trying to drive attention, demand, traffic to the brand. And that's large these days, we'll stay the same and consistent. And I think it'll be consistent with quarters in the past and going forward inclusive of how we use Amazon.
Really kind of.
Optimizing and selective at.
Busy time of year, where you're trying to drive attention demand traffic to.
To the brand and that largely stays.
We will stay the same and consistent and I think it will be consistent with quarters in the past and going forward inclusive of of how we use Amazon.
Speaker 3: And so I think as we called out, we had a successful Prime Day. It was successful and it accomplished a number of objectives for us and we think it's consistent with how we approach the brand and how we approach promotion.
And so I think as we called out we had a successful prime day. It was successful and it accomplished a number of objectives for us and we think is consistent with how we approach the brand and how we approach promotion.
Speaker 3: And Megan, the other thing I'd say back on Gross Margin is, you know, you asked about 24. You know, we do expect to continue to be able to recapture more gross margin benefit from the down freight as we look into 24. You know, we gave up somewhere in the neighborhood of 600 basis points directly related to inbound freight. We're going to recapture 400 or so in total this year. That would imply we've got more to go as we go into 2024.
And Meg and the only other thing I would say back on gross margin as you asked about 'twenty four we do expect to continue to be able to recapture.
More gross margin benefit from inbound freight as we look into 'twenty four we gave up.
Somewhere in the neighborhood of 600 basis points directly related to inbound freight.
To recapture 400 or so in total this year that would imply we've got more to go as we go into 2024.
Got it that's really helpful. Thanks, so much.
Speaker 2: The next question comes from Sharon Zaxia from William Blair. Please go ahead.
The next question comes from Sharon Zackfia from William Blair. Please go ahead.
Speaker 8: Good morning. Thanks for taking the call. I guess I went about two questions kind of on your longer term outlook because it's been kind of hard to figure things out, you know, from the outside with the stop sale on the call this year.
Hi, good morning, Thanks for taking the call.
I guess my one offs <unk> kind of on your own.
Longer term outlook.
It's been kind of hard.
Take care things out from the outside with the stop sale on the comments here.
Speaker 8: I guess it is a 20% operating margin still kind of an achievable number over time for the business and
Yes.
20% operating margin.
I'll kind of an achievable number over time for the business.
Speaker 8: If so, kind of what's the timeline to you think you can recapture that? And then, secondarily, you know, on the idea of double digit revenue growth.
If so kind of what's the timeline.
Thank you can recapture that and then secondarily on the.
The idea of double digit revenue growth.
I know historically, you had expected that to come from bulk to shrink where in coolers and equipment over the long term just wanted to check if that's on the cancer or if you expect just for question impact from either either or and maybe embedded in that kind of what you need in the U S business to achieve double digit over.
Speaker 8: I know historically you had expected that to come from both drinkware and coolers and equipment over the long term. Just wanted to check if that's still the case or if you expect a disproportionate impact from either, either or, and maybe embedded in that kind of what you need in the US is to achieve double digit over time to give them how international growth.
Tom just given how international is growing.
Good morning, Sharon. Thanks, Thanks for the question I would say.
Speaker 3: Morning, Sharon. Thanks. Thanks for the question. I would say, on this call, we're not updating 2024 and updating our, our kind of long-range guide.
While on this call, we're not updating 2024 and updating our our kind of long range guide.
Speaker 3: You know, what I think we have shown through even a really challenging and period with this recall is...
What I think the we've shown through even a really challenging and in period with this with this recall is that there is gross margin opportunity in front of us.
Speaker 3: that there is gross margin opportunity in front of us that we, as Mike just talked about, we see operating margin improvement opportunity based on some of the unique things that affected in or affecting 2023. You know, the top line
And as Mike just talked about we see operating margin improvement opportunity based on some of the unique things that affected.
And are affecting 2023.
The topline as we as we've shown outsized growth internationally and as we continue to prove.
Speaker 3: As we've shown outsized growth internationally and as we continue to prove the demand opportunity there and as we continue to mature our operations internationally, we think that
The demand opportunity there and as we continue to mature our operations internationally. We think that continues to be a really interesting area to drive long term growth for yeti as it relates to the U S market I think the.
Speaker 3: continues to be a really interesting area to drive long-term growth for Yeti. As it relates to the US market, I think the
Speaker 3: While we obviously have a very well established and in-demand business, when we talk about things like sell-through being strong, our sell-through data comes from the US market. We don't have that same level of visibility globally on the sell-through.
While we obviously have a very well established and in demand business. When we talk about things like sell through being strong our sell through data comes from the U S. The U S market. When you don't have that same level of visibility globally on the sell through so.
Speaker 3: You can extrapolate from that that the U.S. market continues to be very vibrant for us.
You can extrapolate from that that the U S market continues to be very vibrant for us which means that.
Speaker 3: which means that the innovation, the expansion, the new colorways.
The innovation and the expansion the new color ways.
Speaker 3: Within drinkware, within coolers, hard coolers, within soft coolers.
Within drink wear within coolers hard coolers within soft coolers.
Speaker 3: There's a really receptive market and opportunity for us in the US. So, I think all those elements as we get into talking about 2024 and what our guide is in 2024 will be a piece of that. And then as we start to talk about what long term looks like is an update from our original back in 2018 and we went public.
There is a really receptive market and opportunity for us in the U S. So I think all of those elements as we get into talking about 2024, and what our guide is in 2024 will be a piece of that and then as we start to talk about what what long term. It looks like is an update from from our original backing that back in.
2018, and we are a public.
Speaker 8: I guess it's to follow up on that. I don't think you talked about kind of categories. So I know historically, coolers and drink where we're supposed to, you know, both grow at a double-digit pace. You think that's still kind of the right long-term growth rate for both categories.
I guess just to follow up on that I don't think you talked about kind of categories I know historically coolers and drink glamour assistance. Both grew at a double digit pace do you think that's still kind of the right long term.
Growth rates for both categories.
Speaker 3: Thanks, Sharon, for catching my mist on that. You know, I would say, I think it's, I don't think there's anything about the opportunity in those broadly defined categories that would say one over time will naturally grow slower or naturally go faster. I think, really, it
Thanks, Sharon for for catching my missed on that.
I would say I think it's.
Don't think theres anything about the opportunity in those broadly defined categories that would say one.
Over time, we will will naturally grow slower naturally go faster I think really it.
Speaker 3: comes down to how do we continue to expand the definition of drink, where you've seen us do that this year and with success as we called out. I think in coolers and equipment, there's a lot of things, as we called out on this call, that are under that umbrella, that we really like the growth. And if I take coolers and equipment.
Hum.
It's down to how do we continue to expand the definition of drink where you've seen us you've seen us do that this year and with.
With success as we move as we called out I think in coolers and equipment. There is a lot of things as we called out on this call that are under that umbrella that we really like the growth.
If I take coolers <unk> equipment.
Hard coolers, our longest standing category continues to be an outstanding performer and we also called out.
Speaker 3: Hard coolers, our longest standing category, continues to be an outstanding performer. And we also called out what I would call the very limited assortment we have in cargo and gearboxes continue to be an outstanding performer. So, I think it would be tough to sit here and say, you know, one versus the other, because a lot of that will be predicated on the innovation and the acceleration and the awareness we bring within those two portfolios.
What I would call the very limited assortment, we have in cargo and gearboxes.
And to be an outstanding performer. So I think it would be I think it'd be tough to sit here and say.
One versus the other because a lot of that will be predicated on the innovation and any acceleration in the awareness we bring within those two portfolios.
Okay. Thank you.
Thank you.
Speaker 9: The next question comes from Jim Duffy from Stiefel. Please go ahead. Oh, thank you. Good morning. Great execution.
The next question comes from Jim Duffy from Stifel. Please go ahead.
Thank you and good morning, great execution guys.
Yeah.
Speaker 9: I'm going to take a different approach to questions on future years. Matt, I'm hoping you can speak to how you're thinking about strategic objectives for the organization in 2024. What are the areas of the business that are going to be prioritized for allocation of capital? What are some of the areas where you want to strengthen your organizational competencies? You know, what are some of the operational objectives where you believe you have room for improvement? Thank you.
I'm going to take a different approach to questions on future years, Matt I'm, hoping you can speak to how youre thinking about strategic objectives for the organization in 2024, what are the areas of the business that are going to be prioritized for allocation of capital what are some of the areas, where you want to strengthen your organizational com.
<unk>.
What are some of the operational objectives. We believe we have room for improvement. Thank you.
Speaker 3: Morning, Jim. Thanks. Thanks for the question. You know, I'd answer in a couple of ways. And I think you'll hear us talk more about this as we go into 2024. But if I, if I refer back to my prepared remarks, you know, we,
Good morning, Jim Thanks, Thanks for the question.
To answer in a couple of ways and I think Youll hear us talk more about this as we go into 2024, but.
If I refer back to my prepared remarks.
It sounds simplistic, but we introduced a little bit of new language, which is four key things brand products.
Speaker 3: Sounds simplistic, but we introduced a little bit of new language, which is four key things. Brand, product, channels and in geography.
Channels and geographies and I'll take three of those three of those four.
Speaker 3: And I'll take three of those for, you know.
Speaker 3: The investments we've made in growing the brand and the places that we're showing up and the way we're connecting with consumers domestically and globally, I think you'll see us continue to do that.
The investments we've made in growing the brand in the places that were showing up in the way, we are connecting with consumers domestically and globally.
I think youll see us continue to do that and take what I believe is.
Speaker 3: and take what I believe is the greatest in-house marketing and creative team out there and putting us in front of a really diverse audience. And I think you saw elements of that if you followed us this year and you heard elements of that in the quarter. But I think that investment is one of those things that's just in the rhythm of what Yeti has done and done really well without outsized sort of
The greatest in house marketing and creative team.
Out there and putting us in front of a.
Really diverse audience and I think you saw elements of that if you followed us this year and you heard elements of that in the quarter, but but I think that investment is one of those things that just in the rhythm of what yeti has done and done really well without outsized sort of.
Speaker 3: investment. It's a bit part of the rhythm of what we do. We're really smart with the dollars we spend. We're really directed in how we do it in a really impactful nuanced new-odged way.
Investment is part of the rhythm of what we do we're really smart with the dollars. We spend we're really directed and how we do it in a really impactful nuanced nuanced way I.
Speaker 3: I think on the product side, you're going to see us continue to invest in innovation in it.
I think on the product side, you're going to see us continue to invest in innovation and that's.
Speaker 3: That's capabilities and capacity in as an asset like business. That's that's smartly adding talent to an incredibly talented R&D and product and design.
<unk> capabilities and capacity.
As an asset light business.
That smartly, adding talent to an incredibly talented R&D and product and design and sourcing team that we have within yeti and so I think thats that would be the second piece is really amplifying the capabilities that we have within the business and then rounding out.
Speaker 3: and sourcing team that we have within Yeti. And so I think that would be the second piece is really amplifying the capabilities that we have within the business and then rounding out capacity and rounding out skills that allow us to get into more and more what I would call Yeti where the innovation area is.
Capacity in rounding out skills that allow us to get into more and more what I'll call yeti worthy innovation areas.
Speaker 3: As it relates to geography, to Sharon's last question, we think the US market remains incredibly receptive and strong for product innovation into our expanding brand reach. But really, when I think about geography, I think about the international opportunity and the very early days we are in the UK and Europe .
As it relates to geography to Sharon's last question, we think the U S market.
<unk> incredibly receptive and strong for our product innovation into our our expanding brand reach but really when I think about geography, I think about the international opportunity in the very early days, we are in the UK and Europe and the large attractive markets, where we haven't hit.
Speaker 3: and the large attractive markets where we haven't hit maturation in scale and we can do that in an efficient and effective way like we have seen in Australia and Canada.
<unk> and scale and we can do that in an efficient and effective way like we have seen in Australia and Canada.
Speaker 3: And then looking kind of further out to what the opportunities are in select markets in Asia. So I think if I rounded it all up, I would say continue to grow the brand the right way, smartly, as we think about our OptX and SGNA, put kind of positive pressure into the innovation and expansion of the product portfolios and the redefinition of Turinguera and the expansion of coolers and equipment. And then the third one would be the
And then and then looking kind of.
Further out to what the opportunities are in select markets in Asia. So I think if I if I round. It all up I would say continue to grow the brand the right way smartly as we think about our Opex and SG&A.
Put put kind of positive pressure into the innovation and expansion of the product portfolios in the redefinition of drink wire and the expansion of coolers <unk> equipment and then the third one would be.
The.
Speaker 3: thoughtful acceleration of our geographic expansion to take advantage of the inherent opportunity that we see the proof points for.
Thoughtful acceleration of our geographic expansion to take advantage of the inherent opportunity that we see the proof points for it.
Excellent. Thank you so much.
Speaker 2: Action. The next question comes from Robbie Ohms from Bank of America. Please go ahead.
Thanks, Jim.
The next question comes from Robbie Holmes from Bank of America. Please go ahead.
Speaker 10: Oh, good morning. Thanks for taking my question. It was actually the the questions really I just want to clarify on the hard coolers. The so hard coolers were down against tough shipment comparisons, but they're
Good morning, Thanks for taking my question it was actually the.
The question is really I, just wanted to clarify on the hard coolers.
So hard coolers, where we're down.
Against tough shipment comparisons, but there.
Speaker 10: They're an outstanding performer at retail right now and that's the cell through. Or is it doing really well on D to C because it sounds like...
They are an outstanding performer at retail right now and Thats.
That's the sell through.
Or is it doing really well on D C. Since it sounds like the.
Speaker 10: the weaker D to C, you know, that there's some pressure from average order size. I'm just trying to get an understanding of what hard coolers did in the quarter.
The weaker D to C.
There is some pressure from average order size I'm, just trying to get a understanding of what hard coolers did in the quarter.
Speaker 5: Yeah, hey, Robbie. So, you know, what I would say is that it did...
Yeah, Hey, Ravi so.
What I would say is it did.
Speaker 5: Heart coolers did well on a consumer demand basis, which encompasses both wholesale cell through, where we saw really strong growth of heart coolers on a cell through basis, as well as within D to C. So when we talk about consumer demand, that's essentially what we're referring to is kind of a US based cell through and our major D to C channels. You know, this is social good.
Cardholders did well on a consumer demand basis, which encompasses both wholesale sell through where.
We saw really strong growth of hard coolers on a sell through basis as well as within DTC. So when we talk about consumer demand that's essentially what we're referring to as kind of a U S based sell through in our in our major DTC channels.
Yes.
The.
Speaker 5: And we did see growth of hard coolers within D to C. I think the comments around AOV, I think, are driven by a couple things. One, not having the soft coolers in D to C for the full quarter. And number two, more of a...
And we did see growth of hard coolers within within DTC I think.
Comments around <unk>.
I think are driven by a couple of things one not having the soft coolers in D C for the full quarter.
And number two more of a.
Speaker 5: kind of strength of drinkware and new customers coming into growth of new customers, coming into the brand via drinkware and a UPP question within drinkware as well. So that was the real story around kind of the AOV, but to your original question, we feel really good about how hard colors performed at a point of cell level within wholesale as well as within Deed.
Kind of strength of drink ware, and new customers coming into growth of new customers coming into the brand via drink Ware and a U P T.
<unk> within drink Ware as well so that was the real story around kind of the AAV, but at your to your original question.
We feel really good about how hard coolers performed.
At a point of sell level.
Within wholesale as well as within D C.
That is really helpful and just a follow up question I'm, just curious if youre seeing any changes.
Speaker 10: That is really helpful. And just to follow up question, I'm just curious if you're seeing any changes, you know, in the competition and what they're doing. And are any of the partners, you know, looking to sort of merchandise into lower price point versions of what you guys do, just given that the challenge is out there for the consumer.
And the competition and what they're doing and are any of the partners.
Looking to sort of merchandize into lower price point versions of what you guys do just given the challenges out there for the consumer.
Thanks, Ravi I'll take that one I would say a couple of things to that.
Speaker 3: Thanks Robbie, I'll take that one. You know, I would say a couple things to that. We're not seeing lower price point trade down. You know, I think that as we talked in the past, I think when you have products in a premium category, we tend to be a one kind of a one category, not a need category, and I think our job, and we've done it successfully is...
We're not seeing.
Lower price point trade down.
I think that as we've talked in the past.
Uh huh.
We have products in a premium category, we tend to be.
<unk>.
Kind of one category not a need category and I think our job and we've done it successfully.
Speaker 3: for years and I think in the most recent quarters is drive that desire. So we haven't seen that trade down. I think from the competitive environment, particularly in drink wares, I think there's a lot of interest in that category. There's a number of entrants that have come into it over the last.
For years and I think in the most recent quarter is drive that desire. So we haven't seen that that that trade down a tick from the competitive environment.
Particularly in drink where is I think there's a lot of there's a lot of interest in that category.
A number of entrants that have come into it over the last 12 to 18 months or kind of <unk>.
Speaker 3: of 18 months or kind of driven what I would call significant share of voice in that space. But I think that when we look at
<unk>, what I would call a significant share of voice in that in that space.
But I think that when we look at our results. The partnerships, we have with our wholesale partners. The success, we're seeing in our DTC business.
Speaker 3: Our results, the partnerships we have with our whole-fown partners, the success we're seeing in our D to C business, you know, we're taking a different tact, which is continuing to thoughtfully exist.
We're taking a different tact, which is continuing to thoughtfully expand our drink ware.
Speaker 3: our drinkware category in business. You've seen us do it this year, which is not just chase what I think is an important trend, but a trend in hydration. Make sure we have relevant products.
Category business, you've seen us do it this year, which is not not just chase.
I think it's an important trend, but a trend and hydration make sure we have relevant products, but there also we continue to redefine the game and make sure that we're in front of consumers in and more broadly defined drink wherein I think youll see us continue to do that we think that's a winning strategy. We think it's not only a winning strategy in the near term but the.
Speaker 3: But they're also we continue to redefine the game and make sure that we're in front of consumers in
Speaker 3: in more broadly defined drinkware. And then you'll see us continue to do that. We think that's a winning strategy, winning it's not only a winning strategy in the near term, but the mid and long term. And we're seeing that receptivity in our cell through and point of sale. And we're also seeing that receptivity from the welcome from our wholesale partners.
The mid and long term and we're seeing that receptivity.
Our sell through.
Point of sale and we're also seeing the receptivity from the.
Welcome from our wholesale partners.
That's great. Thanks, Matt.
Speaker 2: Thanks for having me. The next question comes from Brooke Roach from Golden Sachs. Please go ahead.
Thanks Robert.
Next question comes from Brook Roche from Goldman Sachs. Please go ahead.
Speaker 11: Good morning and thank you for taking our question. Mom, I think you could elaborate on the plan for contribution of growth for more innovation versus the core as you look ahead. How are you thinking about the potential for the Yeti brand to move into new categories beyond the targeted expansions of your current categories? And do you think that adjacent categories require any innovation know-how or functionality that you currently don't have in-house?
Good morning, and thank you for taking my question.
I was hoping you could elaborate a whole pole for conservation Mcgrath from origination versus the core as you look ahead. How are you thinking about the potential for the yeti brand to move into new categories beyond the targeted expansion of your current category and do you think that adjacent categories require any innovation knowhow or functionality that you currently don't have in house.
Speaker 3: I broke a great question and I would mix a couple things. I think I would call it, it's definitional to start with, which is
I broke a great great question and I would I would.
All mix a couple of things.
I would call it really it's definitional to start with which is.
<unk>.
Speaker 3: If you say that our base is
If if if you say that our base is.
Speaker 3: And we have a proven competence in drinkware, hard coolers, soft coolers. I would extend the early days of cargo, but all the capabilities and competence in cargo, in bags. You know, we think within that, what I would call base.
And we haven't.
Proven competence and drink ware hard coolers soft coolers.
I would extend.
The early days of cargo, but all the all the capabilities and competence.
In cargo.
In bags, we think within that what I would call base.
Speaker 3: There's significant opportunity for expansion, new customer use cases, new use environments, innovation, including things like colorways, but also new form factors. So within that,
There is significant opportunity for expansion new customer use cases, new use environments innovation, including.
Including things like color ways, but also new form factors so within that.
Speaker 3: We think there's significant opportunity and we have all the confidence in the world in the talent and capabilities between our in-house engineering design plus our incredible supplier relationships and sourcing and procurement.
Core we think there's we think there's significant opportunity in <unk>.
I have all the confidence of the world and the talent and capabilities between our in House engineering design plus or.
Credible supplier relationships and sourcing and procurement teams.
Speaker 3: You know, as we think about the roadmap beyond where yet it could go, where customers we believe have given us explicit permission and almost borderline demand that we would move into it. I think we do have many of those.
As we think about the roadmap beyond where yet it could go where cut.
Customers, we believe have given us explicit permission.
It almost borderline demand that we would we would move into it.
I think we do have many of those.
Our capabilities in house to go after some of those things I think some of them as I mentioned earlier may be additional.
Speaker 3: capabilities in house to go after some of those things. I think some of them, as I mentioned earlier, may be additional talent capability capacity that we would bring into the business. But that's no different than our evolution from being a hard cooler only company back in 2014 to adding soft coolers, to adding drinkware, to then adding cargo, to adding bags.
Talent capability capacity that we would bring into the business, but thats no different than our evolution from being a hard cooler only company back in 2014 to adding soft coolers to adding drink wear to that and cargo to adding bags.
Speaker 3: You know, the small, the mighty chair business we have, we make incredible, incredible chairs and blankets and all these other things that are sort of percolating out there. So I don't think there is something that is...
The small, but mighty chair business, we have.
Incredible incredible chairs and blankets and all these all these other things that are sort of percolating out there. So I don't think there is something that is.
Speaker 3: So ethic a shift that it wouldn't feel in line in line with what what we're doing, but I think that's part of to one of the questions or that's part of the investment area that we're going to continue to make.
So epic a shift that it wouldn't feel in line in line with what we're doing but I think thats part of one of the questions are that's part of the investment area that we're going to continue to make.
Great. Thank you so much.
Thanks Robert.
And our last question comes from Anna Glass skin from B Riley. Please go ahead.
Speaker 2: And our last question comes from Anae Glaskin from B. Riley. Please go ahead. So
Hey, guys. Good morning, Thanks for taking my question.
Speaker 12: I just want to understand a little bit better the Amazon Prime dynamic. Great that it is as well. So you guys, my understanding was that historically the discounts you offer are on end of season colors. Like I think the yellow and purple from this most recent season. So you just have more of those colors left over after the key selling period or was there more product allocated for the Amazon Prime Day versus the prior year?
I just have one.
There's been a little bit better I think Amazon Prime dynamic great.
I'll see you guys my understanding was that historically.
Thank you Arthur and the season I think the online car thoughtfulness.
Did you just have more of those colors left over after the key selling period or was there more product allocated for the Amazon Prime now versus the prior year.
Yes, good morning, and good question.
Speaker 5: Yeah, good morning and good question. I would say, to your point, what we did for prime day this year was largely consistent with.
I would say to your point.
What we did for Prime day this year was largely consistent with.
Speaker 5: you know, how we've acted on a promotional basis in the past. It was in the life product, prior season colors. And I do think it's an important point. The important point. While we did have a big prime day, we were less promotional on e-commerce this year than we were last year. So.
We've acted on a promotional basis in the past it was end of life product.
Prior system colors.
And I do think it's an important point important point, while we did have a big Prime day, we were less promotional on E. Commerce. This year than we were last year. So.
But specifically to two.
Speaker 5: But specifically to answer your question, we were thrilled with the results of a prime day. We did make a larger assortment of our volume of product available. Then we have, and we were thrilled with the results. We thought it was a really good sign of just...
Answer your question, we were thrilled with the results of Prime day, we did make a larger.
Assortment of our volume of product available there.
Then we have.
And we were thrilled with the results we thought it was a really good sign of just demand for the overall brand.
Speaker 1: demands for the overall brand. There was another prime day and obviously this quarter that we really didn't participate in. We chose to participate at a greater level at the one in July and we're thrilled with the results.
There was another prime day, and obviously this quarter that we really didn't participate in wechat.
We chose to participate at a greater level of the one in July and we're and we're thrilled with the results.
Great. Thanks.
Speaker 2: This concludes our question and answer session. I'd like to turn the conference back over to Matt Ranges for any closing remarks.
This concludes our question and answer session I would like to turn the conference back over to Matt Wrenches for any closing remarks.
Thank you all for joining us today look forward to speaking on our Q4 call and update you on the continued progress of Yeti.
Speaker 3: Thank you all for joining us today. Look forward to speaking on our Q4 call and updating you on the continued progress of Yeti.
Speaker 2: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Speaker 13: And I.
Yeah.
[music].
Okay.
Yeah.