Q4 2023 YETI Holdings Inc Earnings Call
Operator: The Ultimate Parody Site! All rights reserved. The Ultimate Parody Site! Good day, and welcome to the YETI Holdings fourth quarter 2023 earnings conference call. All participants will be in a listen-only mode.
Good day and welcome to the Yeti Holdings' fourth quarter 2023 earnings Conference call.
All participants will be in a listen only mode.
Operator: Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on a touch-tone phone.
Should you need assistance. Please signal a conference specialist by pressing the Starkey followed by zero.
After todays presentation, there will be an opportunity to ask questions.
To ask a question you May press Star then one on a touchtone phone.
Operator: To withdraw your question, please press star, then 2. Please note, this event is being recorded. I would now like to turn the conference over to Tom Shaw, Vice President, Investor Relations. Please go ahead.
To withdraw your question. Please press Star then two.
Please note this event is being recorded.
I would now like to turn the conference over to Tom Shaw, Vice President Investor Relations. Please go ahead.
Tom Shaw: Good morning, and thanks for joining us to discuss YETI Holdings' fourth quarter and fiscal 2023 results. Leading the call today will be Matt Reintjes, President and CEO, and Mike McMullen, 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, except as required by law. Unless otherwise stated, our financial measures are disclosed, and this call will be on a non-GAAP basis.
Tom Shaw: Good morning, and thanks for joining us to discuss Yeti Holdings' fourth quarter and fiscal 2023 results.
Leading the call today will be Matt <unk>, President and CEO and Mike Mcmillan CFO.
Speaker Change: Following our prepared remarks, we'll open the call for your questions.
Speaker Change: Before we begin I'd like to remind you that some of the statements that we make today on this call maybe 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.
Speaker Change: 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.
Speaker Change: We undertake no obligation to revise or update any forward looking statements made today as a result, with new information future events or otherwise except as required by law.
Speaker Change: Unless otherwise stated our financial measures disclosed on this call will be on a non-GAAP basis.
Tom Shaw: We use non-GAAP measures as we believe they more accurately represent the true operational performance and underlying results of our business. Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are included in the press release or in the presentation posted this morning on our investor relations section of our website at yeti.com. Now, I would like to turn the call over to Matt.
Speaker Change: We use non-GAAP measures as we believe they more accurately represent the true operational performance and underlying results of our business.
Speaker Change: Reconciliations of these non-GAAP measures to the 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.
Speaker Change: And now I would like to turn the call over to Matt.
Matthew J. Reintjes: Thanks, Tom, and good morning, everyone. I would like to start our call with some perspective on YETI's 2023 and how it informs 2024. YETI delivered a solid year of growth and gross margin expansion, even with one of our more challenging fourth quarters. We continue to see real strength in our brand and momentum in our drinkware business, while, at the same time, we saw inconsistent consumer spending in the fourth quarter on our coolers profit. Overall, we remain confident about YETI's brand and potential as we continue to expand our product and our audience. As we look at our drink or business, we saw continued market interest in sustainable products that not only address hydration but also provide for multiple use cases on various occasions.
Matt: Thanks, Tom and good morning, everyone I would like to start our call with some perspective on Yeti 2023, and how it informs 2024.
<unk> delivered a solid year of growth and gross margin expansion, even with one of our more challenging fourth quarters, we continue to see real strength in our brand and momentum in our drink water business. While at the same time, we saw inconsistent consumer spending in the fourth quarter on our coolers product.
Matt: Overall, we remain confident about yeti brand and potential as we continue to expand our product and our audiences.
Matt: If you look at our drink business. We saw continued market interest in sustainable products that not only address hydration, but also provide for multiple use cases in various occasions are.
Matthew J. Reintjes: Our diverse portfolio is designed for versatility and durability and is well-positioned to address what we believe are long-term market needs. Leaning into this, we not only delivered our strongest quarter of the year, but we also saw YETI Drinkware reach annual sales of $1 billion in 2023. Even more exciting, we achieved this milestone through balanced growth across our portfolio and consumer demographics. This included gains in customer acquisition, retention, and customer value among both female and male consumers. We expect these dynamics will create a foundation for our continued success and expansion in the category. As we mentioned in previous quarters, consumers continue to be more discerning with their spend. We saw this play out in the fourth quarter as this caution extended to our coolers.
Matt: Our diverse portfolio is designed for versatility and durability and is well positioned to address what we believe our long term market needs.
By leaning into this we not only delivered our strongest quarter of the year, but we also saw yeti drink bar reach annual sales of $1 billion in 2023.
Matt: Even more exciting we achieved this milestone through balanced growth across our portfolio and consumer demographics.
Matt: This included gains in customer acquisition retention and customer value with both female and male consumers.
Matt: We expect these dynamics will create a foundation for our continued success and expansion in the category.
Matt: As we mentioned in previous quarters consumers continue to be more discerning with spend.
We saw this play out in the fourth quarter at this caution extended into our coolers.
Matthew J. Reintjes: While the Coolers' performance for the quarter fell short of our expectations, as consumer demand shifted away from higher-priced goods, we believe we maintained our premium share in the market. Even though we anticipate some of these headwinds will persist this year, we have a number of actions in place to drive demand, including a range of new products. Now taking a look at some of our financial highlights. In the fourth quarter of 2023, we continued to showcase our gross margin strength, hitting a record 60%, and delivered adjusted operating margin growth, emphasizing the quality of our revenue. As has become a standard of the YETI story, our balance sheet remains a source of strength with excellent inventory management and an all-time high cash of nearly $440 million.
Matt: While the coolers performance for the quarter fell short of our expectations as consumer demand shifted away from higher priced goods. We believe we maintained our premium share in the market.
Matt: Even though we anticipate some of these headwinds will persist. This year, we have a number of actions in place to drive demand, including a range of new products.
Speaker Change: Now taking a look at some of our financial highlights.
Speaker Change: In the fourth quarter of 2023, we continued to showcase our gross margin strength hitting a record 60% and delivered adjusted operating margin growth emphasizing the quality of our revenue.
Speaker Change: As has become a standard of the Yeti story, our balance sheet remains a source of strength with excellent inventory management and all time high cash of nearly $440 million.
Matthew J. Reintjes: Sales grew out to 6% with pace by continued expansion of our drinkware against the previously mentioned cooler challenge, landing the quarter below our double-digit growth target. We saw this dynamic in coolers in both our DTC and wholesale channels. As we shift to 2024, I remain incredibly enthusiastic about the opportunity to drive our business and our growing global brand. Let me start with how we plan to put our balance sheet together.
Speaker Change: Sales growth of 6% was paced by continued expansion of our drink ware against the previously mentioned cooler challenges landing the quarter below our double digit growth target.
Speaker Change: We saw this dynamic in coolers and both our DTC and wholesale channels.
Speaker Change: As we shift to 2024 I remain incredibly enthusiastic about the opportunity to drive our business and our growing global brand.
Speaker Change: Let me start with how we plan to put our balance sheet to work.
Matthew J. Reintjes: In addition to priority investments in the business, we were pleased to announce the acquisition of two new product portfolios in the cookware and BAG categories. In cookware, by leveraging acquired designs and processes, we are developing a new line of YETI cast iron cookware and accessories that will launch later this summer, allowing us to access the $10 billion plus premium cookware market. Also, at the beginning of February, we completed our acquisition of Mystery Ranch, a Bozeman, Montana-based designer and manufacturer of highly durable backpacks and bags. The team in Bozeman shares the YETI commitment to superior design, driving innovation, and supporting our communities with the best gear we can make. This range of mission-based outdoor and everyday designs will perfectly complement YETI's premium line of waterproof and everyday bags.
Speaker Change: In addition to priority investments in the business. We were pleased to announce the acquisition of two new product portfolios and cookware and bags.
Speaker Change: In cookware by leveraging acquired designs and processes, we are developing a new line of yeti cast iron cookware and accessories that will launch later this summer, allowing us to access the $10 billion plus premium cookware market.
Speaker Change: Also at the beginning of February we completed our acquisition of mystery Ranch or Bozeman, Montana based designer and manufacturer of highly durable backpacks and bags.
The team in Bozeman shares the yeti commitment to superior design, driving innovation and supporting our communities with the best gear you can make.
Speaker Change: This range of mission based outdoor and everyday designs will perfectly complement <unk> premium line of waterproof and everyday bags.
Matthew J. Reintjes: I look forward to the coming seasons as we introduce this incredible range of bags and packs to our global audience, further opening our opportunity in the $9 billion plus premium bags category. We have also made significant talent additions in the business over the past few months to support these moves. Lane Rigney joined us to run soft goods, including our Mystery Ranch acquisition. Lane was most recently CEO of Osprey PAX and, prior to that, president of Camelback.
Speaker Change: I look forward to the coming seasons as we introduce this incredible range of bags impacts through our global audiences.
Speaker Change: Further opening our opportunity and the $9 billion plus premium bags category.
Speaker Change: We also made significant talent additions in the business over the past few months to support these news.
Lane Rigney joined us to run soft goods, including our mystery Ranch acquisition.
Speaker Change: Lane was most recently CEO of Osprey packs and prior to that president of Camelback.
Matthew J. Reintjes: In addition, we have added additional resources to support M&A, including a corporate development leader to help us identify and execute on inorganic opportunities that support our product expansion. All these inorganic moves complement our incredible in-house product development team and build upon the potential for the future. Additionally, today we announce that our Board of Directors has authorized the repurchase of up to $300 million of YETI's common stock.
Speaker Change: In addition, we have added additional resources to support M&A, including our corporate development leader to help us identify and execute on inorganic opportunities that support our product expansion.
Speaker Change: All of these inorganic moves compliment our incredible in house product development team and build upon the potential for the future.
Speaker Change: Additionally.
Speaker Change: Today, we announced that our board of directors has authorized the repurchase of up to $300 million of <unk> common stock.
Matthew J. Reintjes: We plan to be opportunistic with repurchases to offset dilution as we see buybacks that fit within our capital allocation priorities. The primary focus of our capital allocation strategy remains on investment in the business, product expansionary M&A, and finally, opportunistic share repurchase. The deployment of capital in support of M&A, coupled with the share repurchase authorization, shows not only the power of our cash generation but also the ability to put it to work to support long-term sustainable growth and deliver multiple levers of value for shareholders. In conjunction with these capital allocation updates, we remain laser-focused on making the right decisions to drive our long-standing strategic growth priorities. As I provide updates across our four focus areas, the overarching themes are brand reach, product diversification, channel build, and globalization, areas where we made incredible strides in 2023, starting with Brandt.
Speaker Change: Plan to be opportunistic with repurchases to offset dilution as we see buybacks that fit within our capital allocation priority.
Speaker Change: Primary focus of our capital allocation strategy remains on investment in the business product expansionary, M&A and finally opportunistic share repurchase.
The deployment of capital in support of M&A, coupled with the share repurchase authorization shows not only the power of our cash generation, but also the ability to put it to work to support long term sustainable growth and deliver multiple levers of value for shareholders.
Speaker Change: In conjunction with these capital allocation updates, we remain laser focused on making the right decisions to drive our long standing strategic growth priorities.
Does that provide updates across our four focus areas. The overarching themes, our brand reach product diversification channel build and globalization.
Speaker Change: Areas, where we made incredible strides in 2023.
Speaker Change: Starting with brand.
Matthew J. Reintjes: Expanding our global customer base, we continue to leverage a breadth and depth strategy by broadening reach while remaining deeply connected and relevant to our consumers. Across our 15 targeted active communities of enthusiasts, we're seeing the payoff of connecting ambassadors, partners, and brand and product storytelling to consumers on both a global and localized scale. With the ongoing push on new product innovation, a priority and opportunity this year will be highlighting the range of our assortment to larger audiences. We will focus broad-based marketing efforts on driving awareness, consideration, and purchase of our product lines, as well as top-of-funnel brand-up. When we look at 2024 and beyond, we see an incredible opportunity to build upon existing and new brand partnerships and collaborations. Some of our Global Reach partners have already started their 2024 activities in the first quarter, including the World Surf League and Natural Selection Tour, and our partners at Austin FC are getting ready to kick off their 2024 season.
Speaker Change: And expanding our global customer base, we continue to leverage the breadth and depth strategy by broadening reach while remaining deeply connected and relevant to our consumers.
Speaker Change: Across our 15 targeted active communities are enthusiastic.
Speaker Change: Seeing the payoff of connecting ambassadors partners and brand and product storytelling to consumers on both the global and localized scale.
Speaker Change: With the ongoing push on new product innovation, a priority and opportunity this year I'll be highlighting the range of our assortment to larger audiences.
Speaker Change: We will focus broad based marketing efforts on driving awareness consideration and purchase of our product lines as well as top of funnel brand efforts.
Speaker Change: When we look at 2024 and beyond we see incredible opportunity to build upon existing and new brand partnerships and collaborations.
Speaker Change: Some of our global reach partners have already started their 2024 activities during the first quarter, including the World Surf League and natural selection tour and our partners at Austin FC are getting ready to kick off their 2024 season.
Matthew J. Reintjes: With these and many other partners, we are continuing to build out the diversity of our domestic and international reach. In addition to our marketing and brand efforts, we plan to continue to leverage our data insights and analytics work to amplify our diversified assortment of products, which will allow us to segment use cases. Whether coffee, cocktails, health and wellness, or travel, we build addressable audiences and deliver dedicated brand and product programming. These efforts drive awareness, consideration, and conversion wrapped in a brand and product story about why YETI.
Speaker Change: With these and many other partners we are continuing to build out the diversity of our domestic and international reach.
Speaker Change: In addition to our marketing and brand efforts, we plan to continue to leverage our data insights and analytics work to amplify our diversified assortment of products, which will allow us to segment use cases, with a coffee cocktails health and wellness or travel.
Speaker Change: We build addressable audience and deliver dedicated brand and product programming.
Speaker Change: These efforts to drive awareness consideration and conversion wrapped in a brand and product story of why yeti.
Speaker Change: As we connect in real ways with consumers through branded products. We also open the brand for future product innovation and category expansion.
Speaker Change: Turning to innovation we.
Speaker Change: We're incredibly proud of the expansion of new product during the year driving new use cases extended color options and delivering acquisition and retention on a global scale.
Matthew J. Reintjes: As we connect in real ways with consumers through brand and product, we also open up the brand for future product innovation and category expansion. We were incredibly proud of the expansion of new products during the year, driving new use cases, extended color options, and delivering acquisition and retention on a global scale. This was most apparent with the increasing diversification of our drinkware portfolio in the second half of the year. In Drinkware, we added three smaller volume ramblers designed for coffee and other beverages.
Speaker Change: This was most apparent with the increasing diversification of our drink of our portfolio in the second half of the year.
Speaker Change: And drink, where we added three smaller volume Ramblers designed for coffee and other beverage uses.
Speaker Change: Larger 42 out straw handled bug to sit alongside our other stalled at offerings and a yeti cocktail Shaker and insulated wine chiller to complement our beverage bucket in ICU.
Speaker Change: Overall the success of these introductions helped support strong consumer demand and sell through across our channels.
Speaker Change: On the coolers and equipment side, our cargo line is delivering above expectations as we maintain our bullishness on the potential of the cargo and storage space.
Matthew J. Reintjes: A larger 42-ounce straw-handled mug to sit alongside our other straw-lit offerings, and a YETI cocktail shaker and an insulated wine chiller to complement our beverage bucket and ice cream. Overall, the success of these introductions helps support strong consumer demand and sell-through across our channel. On the coolers and equipment side, our cargo line is delivering above expectations as we maintain our bullishness on the potential of cargo and storage space. In addition, we saw good growth in backpacks, duffels, and tote bags, which gives us strong momentum to continue the bag's expansion. Within coolers, we had high expectations for the holiday season, given the strong year-to-date Q3 consumer sell-through trends of hard coolers, coupled with the return of key soft coolers. However, while we returned to growth in soft coolers, overall demand for hardened soft coolers fell short of expectations.
Speaker Change: In addition, we saw good growth in backpacks, Duffels, <unk>, which gives us strong momentum to continue the backs expansion within coolers, we had high expectations for the holiday season, given the strong year to date Q3 consumer sell through trends of hard coolers, coupled with the return of key soft coolers.
While we returned to growth in soft coolers overall demand for hard and soft coolers that fell short of expectations.
Speaker Change: Even as interest in the overall Yeti brand remained high across our track data and consumer analytics, we saw softness at higher price points and larger baskets, particularly those above $300.
Speaker Change: We believe that part of this reflects our position of having little direct promotional activity against a more promotional driven market backdrop and supporting our gross margin strength in the period.
Speaker Change: We also underappreciated the combined impacts of 2020 twos, new innovation seasonal color strength and a limited end of life promotion in the year ago fourth quarter period.
Matthew J. Reintjes: Even as interest in the overall YETI brand remained high across our track data and consumer analytics, we saw softness at higher price points and larger baskets, particularly those above $300. We believe that part of this reflects our position of having little direct promotional activity against a more promotionally driven market backdrop and supporting our gross margin strength in the period. We also underappreciated the combined impacts of 2022's new innovation, seasonal color strength, and a limited end-of-life promotion in the year-ago fourth quarter period.
Speaker Change: Despite the near term dynamics that impacted coolers in Q4, we remain very confident in these categories as we look to extend our category leadership by driving awareness and releasing new innovation.
Speaker Change: As we consider what we learned in 2023 several key themes, we evidenced in our product approach this year.
Speaker Change: First we will continue to focus on the coolers <unk> equipment category and driving our assortment and price points.
Speaker Change: We expect to fire up our marketing engine to drive deeper awareness of the return and expansion of our soft cooler M series with extended color ways at the same time, we will introduce our next wheeled cooler, which will round out the portfolio with a new price point and size and his family.
Matthew J. Reintjes: Despite the near-term dynamics that impacted coolers in Q4, we remain very confident in these categories as we look to extend our category leadership by driving awareness and releasing new innovation. As we consider what we learned in 2023, several key themes will be evident in our product approach this year. First, we will continue to focus on the cooler and equipment category in driving our assortment and price. We expect to fire up our marketing engine to drive deeper awareness of the return and expansion of our soft cooler M-series with extended colorways.
Speaker Change: As has been our practice, we plan moves in the stack to create new pricing windows for innovation to that end in Q1, we will announce targeted changes in some existing rodi and thunder products to create new pricing tiers for near term 2024 product launches.
Speaker Change: Next we will continue to develop and drive broader food and beverage within drink ware, including additional awareness of the 2023 expansion and upcoming 2020 for innovation.
In the near term, we are repositioning some of our stackable cups refreshing, our straw bottle assortment and broadly distributing a strong lift for the first time with our yonder water bottles. In addition, we expect in 2024 to continue to expand drink Ware tabletop and borrower. Finally, we will continue to lean into strategic color deployment across.
Matthew J. Reintjes: At the same time, we will introduce our next wheeled cooler, which will round out the portfolio with a new price point and size in this family. As has been our practice, we plan moves in the stack to create new pricing windows for innovation. To that end, in Q1, we will announce targeted changes to some existing Rody and Tundra products to create new pricing tiers for near-term 2024 product launches. Next, we will continue to develop and drive broader food and beverage within Drinkware, including additional awareness of the 2023 expansion and upcoming 2024 innovation. In the near term, we are repositioning some of our stackable cups, refreshing our straw bottle assortment, and broadly distributing a straw lid for the first time with our yonder water bottles.
Speaker Change: Our portfolio through our inspired by seasonal color strategy and integrated storytelling.
Speaker Change: In addition to incorporating a range of limited colors throughout the year.
Speaker Change: The first wave of colors kicks off next week with our already leaked and highly anticipated return of King crab Orange and the debut of a got a deal.
Speaker Change: Importantly, our product strategy will stay true to who we are and focus on long term sustainable growth. We have developed a nimble commercialization engine, but remained uncompromising in our focus on our core tenants of durability performance and design.
Speaker Change: Believe this is the right approach to building, an enduring brand and meeting true customer needs.
Speaker Change: Within our channel strategy, our business continued to balance shift to DTC in 2023. This.
Speaker Change: As a result of our investments and efforts in digital marketing technology analytics capabilities somewhat impacted by the U S wholesale destocking efforts and tight inventory management, we saw throughout the year.
Matthew J. Reintjes: In addition, we expect in 2024 to continue to expand drinkware, tabletop, and barware. Finally, we will continue to lean into strategic color deployment across our portfolio through our Inspired by Seasonal Color strategy and integrated storyteller. In addition to incorporating a range of limited colors throughout the collection, the first wave of colors kicks off next week with our already leaked and highly anticipated return of King Crab Orange in the debut of Agave.
Speaker Change: In term dynamics are why having powerful diverse and substantial channels to market, including both wholesale and DTC has been a priority.
Speaker Change: Within our DTC channels, we saw a number of encouraging customer trends highlighted by both new and returning growth in each quarter in 2023 within Yeti Dot com, we drove new customer acquisition across both females and males with a positive trend in purchase frequency.
Matthew J. Reintjes: Importantly, our product strategy will stay true to who we are and focus on long-term sustainable growth. We have developed a nimble commercialization engine but remain uncompromising in our focus on our core tenets of durability, performance, and design. We believe this is the right approach to building an enduring brand and meeting true customers. Within our channel strategy, our business continued to shift to DTC in 2023. This is the result of our investments and efforts in digital marketing, technology, and analytics capabilities, somewhat impacted by the U.S. wholesale destocking efforts and tight inventory management we saw throughout the year. These interim dynamics are why having powerful, diverse, and substantial channels to market, including both wholesale and D2C, have been a priority.
Returning customer growth was even more impressive delivering strong metrics across gender and age.
Speaker Change: While average order values were pressured in part due to product mix. We believe these overall customer measures continued to demonstrate strength.
Speaker Change: Moreover, It provides a strong foundation to drive engagement in 2024, as we amplify in action our analytics insights.
Speaker Change: Amazon remains strong in the fourth quarter and even though we did not participate in October Prime day, we did see a good engagement during the holiday gifting periods.
Speaker Change: <unk> continues to prove effective in reaching both new and existing customers on the platform.
Speaker Change: The performance of our corporate sales channel was more inconsistent in both the quarter and full year 2023 following years of blockbuster growth.
Speaker Change: We see significant untapped potential in both the domestic and global markets.
Speaker Change: To that end, we are focused on expanding customization capability strategic partnerships and our inbound and outbound sales efforts.
Matthew J. Reintjes: Within our DTC channels, we saw a number of encouraging customer trends highlighted by both new and returning growth in each quarter of 2023. Furthermore, within yeti.com, we drove new customer acquisition across both females and males with a positive trend in purchase frequency. Returning customer growth was even more impressive, delivering strong metrics across gender and age. While average order values were pressured in part due to product mix, we believe these overall customer measures continue to demonstrate strength. Moreover, it provides a strong foundation to drive engagement in 2024 as we amplify our analytics. Amazon remained strong in the fourth quarter, and even though we did not participate in October Prime Day, we did see good engagement during the holiday gifting period.
Speaker Change: Our yeti stores increased from 13% to 18 locations during the year.
Speaker Change: We're pleased with our stores overall execution and in particular the growth during the holiday period.
Speaker Change: We continue to see yeti stores as powerful tools to drive awareness consideration purchase and broader customer acquisition.
Speaker Change: Beyond the four wall value creation, our data would indicate a broader sales impact across the rest of our channels is new stores come online.
Speaker Change: We are currently expecting to add four to five locations in 2024, including our first store in New York City, and our first international store in Calgary.
Speaker Change: Planned to be just in time for the Calgary Stampede, which last year grew $1 4 million visitors over a 10 day period.
Matthew J. Reintjes: The channel continues to prove effective in reaching both new and existing customers on the platform. However, the performance of our corporate sales channel was more inconsistent in both the quarter and full year 2023, following years of blockbuster growth. We see significant untapped potential in both the domestic and global markets. To that end, we are focused on expanding customization capabilities, strategic partnerships, and our inbound and outbound sales. Our YETI stores increased from 13 to 18 locations during the year.
Speaker Change: Accretable event, we have actively participated in for over eight years.
Speaker Change: Shifting to wholesale you returned to growth in the fourth quarter, while inventory in the channel is in good shape and running below where we entered 2023, we've seen little overall changed a cautious ordering trends in the channel we.
Speaker Change: We will continue to lean into areas of strength across our partners and leveraged new product and.
Speaker Change: In addition, we will thoughtfully expand our reach including growth with our leading wholesale partners previously communicated potential expansion with tractor supply and.
Speaker Change: And new opportunities that leverage our diversified product assortment.
Speaker Change: Our international business had a great 2023.
Speaker Change: Growing 28% for the year and increasing its mix of our total business to just under 16%.
Matthew J. Reintjes: We were pleased with our store's overall execution and, in particular, the growth during the holiday period. We continue to see YETI stores as powerful tools to drive awareness, consideration, purchase, and broader customer acquisition. Beyond the four-wall value creation, our data would indicate a broader sales impact across the rest of our channels as new stores come online. We are currently expecting to add 4 to 5 locations in 2024, including our 1st store in New York City and our 1st international store in Calgary. We plan to be just in time for the Calgary Stampede, which last year drew 1.4 million visitors over a 10-day period, an incredible event we have actively participated in for over eight years.
Speaker Change: Moreover, we finished the year with almost 40% growth in the quarter, marking our highest growth rate of the year and underscoring the momentum of the business.
Speaker Change: Thematic Lee our international business is focused on three initiatives. This year growing brand awareness building, our successful omnichannel and supporting the significant opportunity in the customization business and.
Speaker Change: In addition, we continue to work on cultivating new markets as we further develop the existing ones.
Speaker Change: As we look specifically at each region nowhere as our momentum more evident than in Europe, and we expect outsized growth to continue in 2024.
Speaker Change: Accelerating marketing activities this year, including event activation and development of our ambassador roster.
Speaker Change: We will continue to invest in our team to support a range of activities, including our brand marketing and our growing wholesale base, which now covers nearly 1000 doors in the region.
Matthew J. Reintjes: Shifting to wholesale, YETI returned to growth in the fourth quarter. While inventory in the channel is in good shape and running below where we entered 2023, we've seen little overall change to cautious ordering trends in the channel. We will continue to lean into areas of strength across our partners and leverage new products. In addition, we will thoughtfully expand our reach, including growth with our leading wholesale partners, previously communicated potential expansion with Chapter of Supply, and new opportunities that leverage our Diversified Practice Ordinance. Our international business had a great 2023, growing 28% for the year and increasing its share of our total business to just under 16%. Moreover, we finished the year with almost 40% growth in the quarter, marking our highest growth rate of the year and underscoring the momentum of the business.
Speaker Change: Momentum in Australia sustained through 2023, and I had the opportunity to experience firsthand this past January.
Speaker Change: Seeing the work our team has accomplished around Australia with our local partners and dealers was incredible the way the Australian consumer has adopted yet he has their own has amplified my conviction about the global opportunity for us.
Speaker Change: Our focus now is on building, an even more robust wholesale network in Australia, plus customization for both corporate sales and e-commerce opportunities with extensive room to scale this business.
Speaker Change: Canada remains our largest international market.
Speaker Change: Our other regions customization and corporate sales, our focus and we expect to more fully develop these capabilities. We will also thoughtfully add to our wholesale doors as we are actively looking at several new accounts.
Speaker Change: Before I turn the call over to Mike.
First I'd like to thank our team and all our partners for their outstanding focus execution and dedication to yeti.
Matthew J. Reintjes: Thematically, our international business is focused on three initiatives this year, growing brand awareness, building our successful omnichannel, and supporting the significant opportunity for customization. In addition, we continue to work on cultivating new markets as we further develop the existing. As we look specifically at each region, nowhere is our momentum more evident than in Europe, and we expect outsized growth to continue in 2024. We're accelerating marketing activities this year, including event activation and the development of our ambassador roster. We will continue to invest in our team to support a range of activities, including our brand marketing and our growing wholesale base, which now covers nearly 1,000 doors in the region. Momentum in Australia will sustain through 2023, and I had the opportunity to experience it firsthand this past January.
Mike: Collective effort is essential to our success and puts the brand in a great position to grow drive gross margin expansion and invest while continuing to deliver increased profitability.
Mike: Capital Light model clean balance sheet strong cash flow. We believe we have ample opportunities to put capital to work in support of value creation and our growth agenda.
Mike: Importantly, we remain confident in the long term sustainable growth potential for the Yeti brand.
Mike: With that I'll now turn the call over to Mike.
Mike: Thanks, Matt and good morning, everyone.
Mike: Start today with a quick update on the impact of our voluntary product recall on our GAAP results followed by a more detailed look at our non-GAAP measures for the fourth quarter and fiscal year.
Mike: And then provide our outlook for fiscal 2024, and some additional details on our capital allocation actions outlined today.
Matthew J. Reintjes: Seeing the work our team has accomplished throughout Australia with our local partners and dealers was incredible. The way the Australian consumer has adopted YETI as their own has amplified my conviction about the global opportunity for us. Our focus now is on building an even more robust wholesale network in Australia, plus customization for both corporate sales and e-commerce opportunities. We have extensive room to scale this business. Canada remains our largest international market.
Mike: Our GAAP results reported in today's press release includes favorable recall reserve adjustments of $4 9 million associated with the product recall that commenced last March.
Mike: Specifically sales benefited by $2 8 million, primarily due to lower than anticipated redemption rates.
Mike: Cost of goods benefited by $1 3 million due to lower costs related to recall logistics and product replacement remedy elections.
Matthew J. Reintjes: Similar to our other regions, customization and corporate sales are a focus, and we expect to more fully develop these capabilities. We will also thoughtfully add to our wholesale stores as we are actively looking at several new accounts. Before I turn the call over to Mike, I would first like to thank our team and all our partners for their outstanding focus, execution, and dedication to YETI.
Mike: And SG&A benefited by $8 million due to lower other recall related costs.
Mike: Benefits have been excluded from our adjusted non-GAAP metrics.
Speaker Change: As we review our performance for the fourth quarter and fiscal year 2023, I would like to remind everyone that all of the financials discussed on today's call are adjusted non-GAAP metrics now.
Matthew J. Reintjes: This collective effort is essential to our success and puts the brand in a great position to grow, drive gross margin expansion, and invest while continuing to deliver increased profitability. With a Capital Light Model, a Clean Balance Sheet, and Strong Cash Flow, we believe we have ample opportunities to put capital to work in support of value creation and our growth agenda. Most importantly, we remain confident in the long-term sustainable growth potential for the YETI brand. With that, I'll now turn the call over to Mike. Thanks, Matt. And good morning, everyone.
Speaker Change: Now turning to our results for the quarter.
Speaker Change: Fourth quarter sales increased 6% to $517 million, we were pleased with a number of aspects of our business. During the period. The drink wear category grew 12% as our recent new product introductions helped drive a broad based growth story across both wholesale and DTC.
Speaker Change: <unk> <unk> customer base continued to grow with gains in both new and returning customers and our international business continued to show momentum posting growth of almost 40% versus the prior period.
Speaker Change: They are all great indicators of our continued brand strength the successful broadening of our product assortment and the significant opportunity that we have in front of US. However, our topline results were below our expectations in Q4, largely due to the performance of coolers that Matt laid out and then I will discuss a bit later.
Mike McMullen: I'll start today with a quick update on the impact of our voluntary product recall on our GAAP results, followed by a more detailed look at our non-GAAP measures for the fourth quarter and fiscal year. I'll then provide our outlook for fiscal 2024 and some additional details on our capital allocation actions outlined today. Our GAAP results reported in today's press release include favorable recall reserve adjustments of $4.9 million associated with the product recall that commenced last March. Specifically, sales benefited by $2.8 million, primarily due to lower-than-anticipated redemption. Cost of goods benefited by $1.3 million due to lower costs related to recall logistics and product replacement remedy elections. And SG&A benefited by $0.8 million due to lower other recall-related costs. However, these benefits have been excluded from our adjusted non-GAAP metrics.
Speaker Change: For the full year sales increased 3% to 168 billion.
Speaker Change: By category drink, where sales increased 12% to $346 million, which was above our expectations.
Speaker Change: We had a fantastic lineup of new product launches during the fourth quarter, which not only broadened our portfolio, but also strengthened our ability to take advantage of the trends in the market that we have seen throughout the year.
Speaker Change: <unk> continued to be one of our best performing product families. As we added a broader range of color options. This year and then introduced our larger sized 42 ounce version in November.
Speaker Change: Our bottoms business continues to grow as we offered expanded color and lid options across many of our classic Rambler sizes.
Speaker Change: As well as younger water bottles.
Mike McMullen: As we review our performance for the fourth quarter and fiscal year 2023, I would like to remind everyone that all of the financials discussed on today's call are adjusted non-GAAP metrics. Now turning to our results for the quarter, fourth quarter sales increased 6% to $517 million.
Speaker Change: The new smaller size Ramblers were well received in all of our markets around the globe due to both a stackable format as well as the new use cases that they offer both new and existing customers.
Speaker Change: Finally, we remain very pleased with the success of our growing range of tabletop offerings, including the previously released beverage bucket and the Q4 introductions of the cocktail Shaker and wind chiller.
Mike McMullen: We were pleased with a number of aspects of our business during the period. The drinkware category grew 12% as our recent new product introductions helped drive a broad-based growth story across both wholesale and D2C. Our D2C customer base continued to grow with gains in both new and returning customers. And our international business continued to show momentum, posting growth of almost 40% versus the prior period.
Speaker Change: Overall drink where sales for the year increased 8% crossing the $1 billion Mark for the first time.
Speaker Change: So it was an equipment sales decreased 4% to $162 million. This was below our expectations driven by lower demand for both hard and soft coolers as we saw signs of more cautious spending from consumers on higher ticket items.
Speaker Change: And for hard coolers had been strong for much of the year, but slow during the holiday period in.
Speaker Change: In addition, our hard cooler growth was impacted by a challenging compare given last Q4, we ran a successful end of life promotion and launched two new sizes within our roadie family.
Mike McMullen: These are all great indicators of our continued brand strength, the successful broadening of our product assortment, and the significant opportunity that we have in front of us. However, our top-line results were below our expectations in Q4, largely due to the performance of coolers that Matt laid out and that I will discuss a bit later. For the full year, sales increased 3% to $1.68 billion.
Speaker Change: Soft coolers, the full channel relaunch of the M series line drove year over year category growth in Q4.
Speaker Change: Net sales from these newly released products were below our expectations.
Speaker Change: Believe there were two factors that contributed to this.
Speaker Change: One after being out of the market for most of the year. We believe the awareness for these new products is still building.
Speaker Change: And two in an effort to maximize initial production, we elected to limit the assortment of color options within these products.
Mike McMullen: By category, Drinkware sales increased 12% to $346 million, which was above our expectations. We had a fantastic lineup of new product launches during the fourth quarter, which not only broadened our portfolio but also strengthened our ability to take advantage of the trends in the market that we have seen throughout the year. Draw Mugs continue to be one of our best-selling product families as we added a broader range of color options this year and then introduced our larger-sized 42-ounce version in November.
Speaker Change: We expect to have our full color portfolio available to us this year and are excited about the growth opportunity in soft coolers in 2024.
Speaker Change: Despite these near term dynamics that impacted coolers in Q4, we remain very confident in these categories as we look to extend our category leadership by driving awareness and releasing new innovation.
Speaker Change: Outside of coolers, our cargo line had a fantastic year, our <unk> family was introduced early last year and consistently outperformed each quarter.
Mike McMullen: Our bottles business continues to grow, as we offer expanded color and lid options across many of our classic Rambler sizes, as well as Yonder water bottles. The new, smaller-sized Ramblers were well-received in all of our markets around the globe due to both their stackable format, as well as the new use cases that they offer both new and existing customers. Finally, we remain very pleased with the success of our growing range of tabletop offerings, including the previously released beverage bucket and the Q4 introductions of the cocktail shaker and wine chiller. Overall, drinkware sales for the year increased 8%, crossing the $1 billion mark for the first time. Beluzan's equipment sales decreased 4% to $162 million.
Speaker Change: Operating from growing category awareness and expanded wholesale merchandising.
Speaker Change: Our bags business also had a strong quarter as we focus on driving ongoing category consideration for our crossroads Camino Hangup product families.
Speaker Change: For the full year sales in the broader coolers <unk> equipment category decreased 5% to $619 million.
Speaker Change: From a channel perspective direct to consumer sales grew 9% to $344 million, representing 67% of total sales driven by strength in drink, where we saw a relatively balanced performance within Amazon and ecommerce during the period supported by growth of both new and returning customer.
Speaker Change: <unk> across both digital channels.
Speaker Change: This combined performance was somewhat offset by a continuation of several trends that we mentioned last quarter.
Mike McMullen: This was below our expectations, driven by lower demand for both hard and soft coolers, as we saw signs of more cautious spending from consumers on higher-ticket items. Demand for hard coolers had been strong for much of the year but slow during the holiday period. In addition, our hard cooler growth was impacted by a challenging compare. Given last Q4, we ran a successful end-of-life promotion and launched two new sizes within our roadie family. Top Coolers, the full-channel relaunch of the M-series line, drove year-over-year category growth in Q4. However, sales from these newly released products were below our expectations. We believe there were two factors that contributed to this. One, after being out of the market for most of the year, we believe the awareness for these new products is still building. And two, in an effort to maximize initial production, we elected to limit the assortment of color options within these products.
Speaker Change: First we saw inconsistent corporate sales ordering which led to a slight decline in sales from this channel versus the prior year period.
Speaker Change: Second we continued to see lower average order values within ecommerce, which again had an impact on both our topline and our costs.
Speaker Change: For the full year DTC sales increased 9% to $1 <unk> 1 billion, representing 60% of overall sales mix compared to 57% last year the.
Speaker Change: The approximate mix within D to C for the year consisted of 52% from our global websites in Yeti stores.
Speaker Change: 25% from the Amazon marketplace, and 23% from corporate sales.
Speaker Change: Wholesale sales increased 1% to $173 million with drink where growth offsetting a decline in coolers and equipment.
Speaker Change: Overall sell through in the channel was positive and we were very pleased with the performance of drink where on a sell through basis.
Mike McMullen: We expect to have our full color portfolio available to us this year and are excited about the growth opportunity in soft coolers in 2024. Despite these near-term dynamics that impacted coolers in Q4, we remain very confident in these categories as we look to extend our category leadership by driving awareness and releasing new innovation. Outside of coolers, our cargo line had a fantastic year.
Speaker Change: Assistant with what we're seeing in our DTC channels are consumers that shop at one of our great retail partners are responding to new products, new colors, and the breadth of our product offering.
Speaker Change: For the full year wholesale channel sales decreased 5% to $675 million, reflecting both a cautious ordering environment and the absence of our M series products for much of the year.
Speaker Change: Outside the U S sales grew 39% to $86 million, representing nearly 17% of total sales with double digit gains across all three regions, Europe, Australia and Canada.
Mike McMullen: Our GoBox family was introduced early last year and consistently outperformed each quarter, benefiting from growing category awareness and expanded wholesale merchandising. Our bags business also had a strong quarter as we focused on driving ongoing category consideration for our Crossroads, Camino, and Tenga product families. For the full year, sales in the broader Coolers & Equipment category decreased 5% to $619 million.
For the year International sales grew 28% to just under 16% of sales compared to 12% last year.
Speaker Change: We remain incredibly encouraged by what we're seeing in these markets. We have made and will continue to make investments to raise brand awareness and support future growth.
Speaker Change: We believe this is a significant growth driver for yeti going forward.
As a final point on sales. This quarter did include $6 $5 million of gift card redemptions related to remedies offered to customers impacted by the product recall.
Mike McMullen: From a channel perspective, direct-to-consumer sales grew 9% to $344 million, representing 67% of total sales, driven by strength in drinkware. We saw a relatively balanced performance within Amazon and e-commerce during the period, supported by growth of both new and returning customers across both digital channels. This combined performance was somewhat offset by a continuation of several trends that we mentioned last quarter. First, we saw inconsistent corporate sales ordering, which led to a slight decline in sales from this channel versus the prior year period. Second, we continue to see lower average order values within e-commerce, which again has an impact on both our top line and our cost.
Speaker Change: Gross profit increased 18% to $311 million or 62% of sales compared to 54, 3% in the same period last year.
Positive drivers of this 590 basis point increase include.
Speaker Change: 380 basis points from lower inbound freight.
Speaker Change: 160 basis points from lower product costs, and 50 basis points from favorable channel mix.
Speaker Change: Full year gross profit increased 11% to 956 million expanding 420 basis points to 56, 9% of sales.
Speaker Change: SG&A expenses for the quarter increased 19% to $209 million or 43% of sales compared to 36% in the same period last year.
Mike McMullen: For the full year, D2C sales increased 9% to $1.01 billion, representing 60% of overall sales mix compared to 57% last year. The approximate mix within D2C for the year consisted of 52% from our global websites and YETI stores, 25% from the Amazon marketplace, and 23% from corporate sales.
Speaker Change: Drivers of this increase were consistent with prior quarters.
Non variable expenses increased 240 basis points as a percent of sales driven by higher demand creation, a rebuild of incentive compensation cost for our employees and sustained investments in head count to support our future growth.
Speaker Change: Variable expenses increased 200 basis points as a percent of sales primarily driven by the higher mix of our D to C. Channel. This includes higher Amazon marketplace fees and higher outbound freight expenses.
Mike McMullen: Wholesale sales increased 1% to $173 million, with drinkware growth offsetting a decline in coolers and equipment. Overall, sell-through in the channel was positive, and we were very pleased with the performance of Drinkware on a sell-through basis. Consistent with what we are seeing in our DTC channels, our consumers that shop at one of our great retail partners are responding to new products, new colors, and the breadth of our product offering. For the full year, wholesale channel sales decreased 5% to $675 million, reflecting both a cautious ordering environment and the absence of our M-series products for much of the year.
Speaker Change: In addition, like last quarter variable expenses were impacted by lower <unk> within our e-commerce channels.
Speaker Change: Full year SG&A expenses increased 18% to 694 million, increasing 540 basis points to 41, 3% of sales with year over year growth slightly above our original mid teens outlook, given the mix and ordering dynamics and our giga see channels that I just mentioned.
Speaker Change: Operating income increased 15% to $103 million or 19, 8% of sales an increase of 150 basis points over the 18, 3% that we reported in the prior year period.
Mike McMullen: Outside the U.S., sales grew 39% to 86 million, representing nearly 17% of total sales, with double-digit gains across all three regions, Europe, Australia, and Canada. For the year, international sales grew 28% to just under 16% of sales compared to 12% last year. We remain incredibly encouraged by what we are seeing in these markets. We have made and will continue to make investments to raise brand awareness and support future growth, as we believe this is a significant growth driver for YETI going forward. As a final point on sales, this quarter did include $6.5 million of gift card redemptions related to remedies offered to customers impacted by the product recall. Gross profit increased 18% to $311 million, or 60.2% of sales, compared to 54.3% in the same period last year.
Speaker Change: We were pleased by our return to operating margin expansion in Q4. Following some of the recent macro and recall related volatility of the past two years.
Speaker Change: For the full year operating income decreased 4% to $263 million contracting 120 basis points year over year to 15, 6% of sales.
Speaker Change: Net income increased 16% to $79 million or <unk> 90 per diluted share compared to <unk> 78 in the prior year period.
Speaker Change: Full year net income declined 4% to $197 million or $2 25 per diluted share.
Speaker Change: Turning to our balance sheet, we ended the year with $439 million in cash compared to $235 million in the year ago period.
Working capital efficiency supported this growth driving more than a four fold increase in free cash flow year over year to $235 million.
Mike McMullen: Positive drivers of this $590 basis point increase include... 380 basis points from lower inbound freight, 160 basis points from lower product costs, and 50 basis points from favorable channel mix. Full-year gross profit increased 11% to $956 million, expanding 420 basis points to 56.9% of sales. SG&A expenses for the quarter increased 19% to $209 million, or 40.3% of sales, compared to 36% in the same period last year.
This included a 9% reduction in inventory year over year to $337 million.
Speaker Change: Total debt, excluding unamortized deferred financing fees, and finance leases with $82 million compared to $90 million at the end of last year's fourth quarter.
Speaker Change: During the quarter, we made a principal payment of $1 million on our term loan.
Speaker Change: Regarding our acquisitions of Missouri Ranch and butter pet industries. Both transactions were completed in Q1 of this year.
And cash on hand, or a combined consideration of $48 5 million.
Speaker Change: As Matt mentioned these acquisitions provide unique opportunities to accelerate product innovation and bags and cookware two categories with significant addressable market sizes and that are a natural fit for the yeti brand.
Mike McMullen: The drivers of this increase were consistent with prior quarters. Non-variable expenses increased 240 basis points as a percent of sales driven by higher demand creation, a rebuild of incentive compensation costs for our employees, and sustained investments and headcount to support our future growth. Variable expenses increased 200 basis points as a percent of sales, primarily driven by the higher mix of our D2C channels. This includes higher Amazon Marketplace fees and higher outbound freight expenses.
Speaker Change: Now turning to our fiscal 2024 outlook.
Speaker Change: We expect full year sales to increase between 7% and 9% compared to fiscal 2020 Three's adjusted net sales.
There are a number of dynamics in our planned 2020 for topline growth rate.
Speaker Change: First we are taking a prudently conservative approach to planning our topline in a year, where we expect ongoing spending pressures and macro uncertainty.
Mike McMullen: In addition, like last quarter, variable expenses were impacted by lower AOVs within our e-commerce channels. Full-year SG&A expenses increased 18% to $694 million, increasing 540 basis points to 41.3% of sales, with year-over-year growth slightly above our original mid-teens outlook, given the mix and ordering dynamics in our D2C channels that I just mentioned. Operating income increased 15% to $103 million, or 19.8% of sales, an increase of 150 basis points over the 18.3% that we reported in the prior year period. We were pleased by our return to operating margin expansion in Q4, following some of the recent macro and recall-related volatility of the past two years. For the full year, operating income decreased 4% to $263 million, contracting 128 basis points year-over-year to 15.6% of sales. However, that income increased 16% to $79 million, or $0.90 per diluted share, compared to $0.78 in the prior year period. Full-year net income declined 4% to $197 million, or $2.25 per diluted share.
Second as a reminder, we do have the gift card redemptions in our fiscal 2023 results.
Speaker Change: We do not expect to see the same level of redemptions in fiscal 2024.
Speaker Change: As has been our practice our outlook does not include an assumption for future gift card redemptions.
Speaker Change: Third our sales outlook does assume approximately 200 basis points of growth from our recent acquisitions.
However, as we integrate the products into Yeti, we do expect some interplay between the mystery ranch product line and the existing yeti bags product line.
Speaker Change: From a channel perspective, we expect balanced channel growth between wholesale and DTC.
Speaker Change: Over the last few years, you all have seen our D to C businesses grow much faster than our wholesale business.
Speaker Change: There are a few dynamics that are causing the channels to grow more in line with each other in fiscal 2024.
Speaker Change: First sales of mystery ranch products will have a higher mix of wholesale sales in year one.
Speaker Change: Missouri Ranch currently goes to market through four primary channels direct traditional outdoor retail specialty and international two step distribution.
Speaker Change: Second we will continue the measured rollout of tractor supply.
Speaker Change: We're very pleased with the partnership so far and any 2020 for sell in will be well supported by sell through trends.
Speaker Change: From a category perspective, we expect coolers and equipment growth to outpace <unk> growth due to two factors.
Mike McMullen: Turning to our balance sheet, we ended the year with $439 million in cash compared to $235 million in the year-ago period. Working capital efficiency supported this growth, driving more than a four-fold increase in free cash flow year-over-year to $235 million. This included a 9% reduction in inventory year-over-year to 337 million. Total debt, excluding unamortized deferred financing fees and finance leases, was $82 million compared to $90 million at the end of last year's fourth quarter.
Speaker Change: First having a full portfolio of soft coolers in 2024.
Speaker Change: And second due to the incremental sales of mystery ranch products.
Speaker Change: From a geographic perspective, we expect international growth of between 20% and 25% and domestic growth in the mid single digit range.
Speaker Change: In terms of phasing across the year, we expect a stronger growth rate in the first quarter with more balanced growth for the duration of the year.
Speaker Change: This relative strength in Q1, largely reflects better wholesale selling opportunities as our inventory in the channel is that a much healthier position coming out of this holiday season versus the prior year.
Mike McMullen: During the quarter, we made a principal payment of $1 million on our term loan. Regarding our acquisitions of Mystery Ranch and ButterPad Industries, both transactions were completed in Q1 of this year, utilizing cash on hand for a combined consideration of $48.5 million. As Matt mentioned, these acquisitions provide unique opportunities to accelerate product innovation in bags and cookware, two categories with significant addressable market sizes that are a natural fit for the YETI brand. Now, turning to our fiscal 2024 outlook. We expect full-year sales to increase between 7% and 9% compared to fiscal 2023 adjusted net sales. There are a number of dynamics in our plan for 2024 top-line growth rate. First, we are taking a prudently conservative approach to planning our top line in a year where we expect ongoing spending pressures and macro uncertainty. Second, as a reminder, we do have gift card redemptions in our fiscal 2023 results. We do not expect to see the same level of redemptions in fiscal 2024.
Speaker Change: We expect gross margins of approximately 57, 5% for the year up from 56, 9% in fiscal 2023.
Speaker Change: It was also above our most recent expectation of 56, 5%.
Speaker Change: The ongoing recovery of inbound freight costs remains the largest driver of margin expansion. This year. So we have factored in some offset stemming from the ongoing conflicts in the Red Sea <unk>.
Speaker Change: Additional product cost opportunities are expected to be partially offset by the pricing actions in hard coolers that Matt mentioned, while channel mix is expected to be roughly neutral.
Speaker Change: From a timing perspective, we expect much stronger year over year margin expansion in the first half of the year.
Speaker Change: In SG&A, we expect year over year growth to be in the range of sales growth inclusive of the annualized <unk> of last year's investments as well as continued investments in fiscal 2024.
Speaker Change: Our investments are focused on several key areas to support future growth, including global expansion continued growth within our DTC business and building out the infrastructure needed to support future M&A opportunities.
Speaker Change: We expect SG&A growth will start the year up double digits with growth moderating in the second half.
Speaker Change: Gather we expect adjusted operating margin of approximately 16% for the year compared to 15, 6% in fiscal 2023.
Mike McMullen: As has been our practice, our outlook does not include an assumption for future gift card redemption. Third, our sales outlook assumes approximately 200 basis points of growth from our recent acquisition. However, as we integrate the product into YETI, we do expect some interplay between the Mystery Ranch product line and the existing YETI bags product line. From a channel perspective, we expect balanced channel growth between wholesale and D2C. Over the last few years, you all have seen our D2C businesses grow much faster than our wholesale business. There are a few dynamics that are causing the channels to grow more in line with each other in fiscal 2024. First, sales of Mystery Ranch products will have a higher mix of wholesale sales in year one. Mystery Ranch currently goes to market through four primary channels: direct, traditional outdoor retail, specialty, and international two-step distribution.
Speaker Change: Below the operating line, we expect an effective tax rate of approximately 25, 3% for fiscal 2024.
Speaker Change: Lately above the 24, 8% rate last year.
Speaker Change: Based on full year diluted shares outstanding of approximately $87 4 million, we expect adjusted earnings per diluted share to increase 9% to 11% to between $2 45 and $2 50.
Speaker Change: Compared to $2 25 in fiscal 2023.
Speaker Change: As Matt noted our board recently authorized a $300 million share repurchase program.
Speaker Change: Our outlook assumes a level of share buyback to offset planned share count dilution for the year.
We will be opportunistic with the remaining authorization as we look to return value to shareholders over time.
Mike McMullen: Second, we will continue the measured rollout of tractor supply. We are very pleased with the partnership so far, and any 2024 sell-in will be well supported by sell-through trends. From a category perspective, we expect coolers and equipment growth to outpace drinkware growth due to two factors. First, we will have our full portfolio of soft coolers in 2024, and second, due to the incremental sales of Mystery Ranch products. From a geographic perspective, we expect international growth of between 20% and 25% and domestic growth in the mid-single-digit range.
Speaker Change: We expect capital expenditures of approximately $60 million, which is in the range of prior years and reflects continued investments across global technology chronic expansion customization capabilities and retail store openings.
Speaker Change: <unk> free cash flow of between $100 million and $150 million for the year.
Speaker Change: Overall, while we have an embedded some caution into our 2024 outlook. We are excited to enter the year with expected growth across all channels all categories and all geographies we.
Speaker Change: We have opportunities to drive deeper connections with more customers leverage our expanding product portfolio, including our integration of the two acquisitions and further develop and scale several aspects of our international businesses.
Mike McMullen: In terms of phasing across the year, we expect a stronger growth rate in the first quarter with more balanced growth for the duration of the year. This relative strength in Q1 largely reflects better wholesale sell-in opportunities as our inventory in the channel is in a much healthier position coming out of this holiday season versus the prior year. We expect gross margins of approximately 57.5% for the year, up from 56.9% in fiscal 2023, which was also above our most recent expectation of 56.5%.
Speaker Change: We expect to thoughtfully balance our gross margins and investments to drive operating margin leverage and we will look at additional opportunities to deploy capital that support our growth initiatives and return value to shareholders.
Speaker Change: Now I would like to turn the call back over to the operator to take your questions.
Speaker Change: We will now begin the question and answer session.
Speaker Change: To ask a question you May Press Star then one on your Touchtone phone.
Speaker Change: If you are using a speakerphone please pick up your handset before pressing the keys.
Mike McMullen: The ongoing recovery of inbound break costs remains the largest driver of margin expansion this year, though we have factored in some offsets stemming from the ongoing conflicts in the Red Sea. Additional product cost opportunities are expected to be partially offset by the pricing actions in hard coolers that Matt mentioned, although channel mix is expected to be roughly neutral.
Speaker Change: If at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.
Speaker Change: And the interest of time, please limit yourself to one question and a follow up.
Speaker Change: At this time, we will pause momentarily to assemble our roster.
Speaker Change: The first question today comes from Brooke Roach with Goldman Sachs. Please go ahead.
Brooke Roach: Good morning, and thank you so much for taking our question.
Mike McMullen: From a timing perspective, we expect much stronger year-over-year margin expansion in the first half of the year. For SG&A, we expect year-over-year growth to be in the range of sales growth, inclusive of the annualization of last year's investment, as well as continued investment in fiscal 2024. Our investments are focused on several key areas to support future growth, including global expansion, continued growth within our D2C business, and building out the infrastructure needed to support future M&A opportunities. We expect SG&A growth will start the year at double digits, with growth moderating in the second half. Together, we expect adjusted operating margins of approximately 16% for the year, compared to 15.6% in fiscal 2023. Below the operating line, we expect an effective tax rate of approximately 25.3% for fiscal 2024, slightly above the 24.8% rate last year.
Brooke Roach: Mike I was hoping you could contextualize, how you're thinking about the medium to long term growth outlook for the Yeti brand as some of these core categories like hard coolers and drink wear become a little bit more mature.
Brooke Roach: And then if you bridge that midterm outlook to FY 'twenty four can you elaborate on how youre thinking about the drivers of your outlook for organic growth in both coolers and drink Claire as you think through pricing actions and coolers, the macro and discretionary trends that you might be seeing and competitor category dynamics. Thank you so much.
Speaker Change: Thanks Brook good morning.
Speaker Change: Think about and we stack up our growth levers over the medium and long term, we remain incredibly bullish on the yeti brand and the Tam that that brand has and the thing that we built for the last 15 plus years in building out yet he is relevance its audience.
Speaker Change: Global nature of it and so.
Speaker Change: It's really break it down in the medium and long term over across a number of things, we think about products and product expansion. Both the products. We have in the portfolio today. The ones that are on on road map I think the success, we saw last year, particularly in drink, we're seeing that expansion as we continue to redefine that that category and what's possible in this broader food and beverage space.
Mike McMullen: Based on full-year diluted shares outstanding of approximately $87.4 million, we expect adjusted earnings per diluted share to increase 9 to 11 percent to between $2.45 and $2.50, compared to $2.25 in fiscal 2023. As Matt noted, our board recently authorized a $300 million share repurchase program. Our outlook assumes a level of share buyback to offset planned share count dilution for the year. We will be opportunistic with the remaining authorization as we look to return value to shareholders over time. We expect capital expenditures of approximately $60 million, which is in the range of prior years and reflects continued investments across global technology, product expansion, customization capabilities, and retail store openings. We expect free cash flow of between $100 million and $150 million for the year.
We think about customer growth, both our domestic and global customer growth in acquisition and in the globalization of the business and the success. We've had in these relatively early markets around the world in the markets that we aren't currently yet.
Speaker Change: And then when you add in our philosophy and our approach to M&A as an innovation extension.
Speaker Change: We announced the mystery Ranch acquisition and the butter, Pat acquisition really as expansionary and the product portfolio. So think about them as things that come in and they hit our product roadmap and help us continue to grow underneath the yeti brand.
Speaker Change: We continue to support the brand we continue to believe that all those levers stack up to supporting double digit growth potential underneath the yeti brand in that Tam is large and the other thing I would add is that we're building the business to support that and evolving our business model as we built this incredibly strong commercialization engine.
Mike McMullen: Overall, while we have embedded some caution into our 2024 outlook, we are excited to enter the year with expected growth across all channels, all categories, and all geographies. We have opportunities to drive deeper connections with more customers, leverage our expanding product portfolio, including our integration of the two acquisitions, and further develop and scale several aspects of our international business. We expect to thoughtfully balance our gross margins and investments to drive operating margin leverage, and we will look at additional opportunities to deploy capital that support our growth initiatives and return value to shareholders. Now, I would like to turn the call back over to the operator to take your questions. We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys.
Speaker Change: It's diverse in its reach and then investing in the future and I think that's that's how we look at it.
Speaker Change: In the near term, but really that's how we build out our median medium and long term growth algorithm.
Speaker Change: And then broke on you know as it relates to 2024, specifically, obviously the guide was 7% to 9% growth for the year.
Speaker Change: And I think there's a couple of important points that I'd call out number one.
Speaker Change: We said we.
Speaker Change: I felt it was appropriate to love to factor in some level of caution for the year given it's our first outlook and as we look at the current environment.
Operator: If at any time your question has been addressed and you would like to withdraw your question, please press star, then two. In the interest of time, please limit yourself to one question and a follow-up. At this time, we will pause momentarily to assemble our roster. The first question today comes from Brooke Roach with Goldman Sachs. Please go ahead.
Speaker Change: Second.
Speaker Change: There is both.
Speaker Change: As we said there is 200 basis points from M&A, but I think it's important to note that there could be some some interplay between the.
Speaker Change: Hum.
Speaker Change: Missouri branch bags business and our bags business.
Speaker Change: But as we look at the other pillars that could drive growth in the international we expect to be a.
Brooke Roach: Good morning, and thank you so much for taking our question. Matt, Mike, I was hoping you could contextualize how you're thinking about the medium to long-term growth outlook for the YETI brand as some of these core categories, like hard coolers and drinkware, become a little bit more mature. And then as you bridge that midterm outlook to FY24, can you elaborate on how you're thinking about the drivers of your outlook for organic growth in both coolers and drinkware as you think through pricing actions in coolers, the macro and discretionary trends that you might be seeing, and competitor category dynamics? Thank you so much.
Speaker Change: A driver of growth next year.
Speaker Change: At a category level.
Speaker Change: We'll expect to see you need to grow slightly faster than our than drink, where really I think there's one of the big factors.
Speaker Change: Factors. There is is getting the soft coolers back out, which we're really excited about.
Speaker Change:
Speaker Change: And then.
Speaker Change: From a.
Speaker Change: From a channel perspective, we've got growth across both wholesale and DTC. So I think the.
Speaker Change: The really important part for us and what we really want to call out is that it's a broad great broad based growth story across our.
Matthew J. Reintjes: Thanks, Brooke. Good morning. You know, as we think about and stack up our growth levers over the medium and long term, we remain incredibly bullish on the YETI brand and the TAM that that brand has and the thing that we've built for the last 15 plus years in building out YETI's relevance, its audience, the global nature of it. And so really break it down in the medium and long term across a number of things. We think about product and product expansion, both the products we have in the portfolio today, the ones that are on our roadmap. I think the success we saw last year, particularly in drinkware, and seeing that expansion as we continue to redefine that category and what's possible in this broader food and beverage space.
Speaker Change: Tire business channels categories geographies.
Speaker Change: And you know we're focused on delivering the year.
Speaker Change: Great. Thanks, so much I'll pass it on.
Speaker Change: The next question comes from Peter Benedict with Baird. Please go ahead.
Peter S. Benedict: Alright, guys. Thanks for taking the questions first one just on the on the new brands.
Peter S. Benedict: The M&A that's happening.
Peter S. Benedict: You plan to kind of run out those products under their legacy brands are you going to.
Peter S. Benedict: Hum.
Peter S. Benedict: The legacy band by Yeti with just what's the approach there and maybe how you're thinking about that kind of longer term and.
Matthew J. Reintjes: We think about customer growth, both our domestic and global customer growth and acquisition, and then the globalization of the business and the success we've had in these relatively early markets around the world and the markets that we aren't currently in. And then when you add in our philosophy and our approach to M&A as an innovation extension, you know, we announced the Mystery Ranch acquisition and the ButterPad acquisition really as an expansion of the product portfolio. So think about them as things that come in, and they hit our product roadmap and help us continue to grow under this YETI brand. You know, we continue to support the brand. We continue to believe that all those levers stack up to supporting double-digit growth potential underneath the YETI brand. And that TAM is large.
Peter S. Benedict: You mentioned kind of some building blocks that would support double digit growth longer term for the AE brand.
Peter S. Benedict: Is that to say that you think that 10% to 15% top line. Although it is still the right way to think about the business longer term.
Peter S. Benedict: It's inclusive of M&A.
Wholesale distribution gains et cetera, both domestically and internationally. That's my first question.
Hey, Peter good morning.
Speaker Change: I'd say when we think about.
Peter S. Benedict: M&A and we talk about it as product expansionary.
Peter S. Benedict: Part of the thesis is the ability to leverage the halo of the Yeti brand. The commercial go to market platforms that we've built and the global expansion, we have I think in the near term.
Peter S. Benedict: I would expect us to operate.
Matthew J. Reintjes: You know, the other thing I would add is that we're building the business to support that and evolving our business model as we build this incredibly strong commercialization engine that's diverse in its reach, and then investing in the future. And I think that's how we look at it in the near term, but really, that's how we build out our medium and long-term growth algorithm. And then, Brooke, as it relates to 2024 specifically, obviously, the guide was 7% to 9% growth for the year. And I think there are a couple important points that I should call out.
These acquisitions in particular, Mr. Answering yeti in 2024, largely as they are what we work on the integration, but as we think about forward road mapping.
Peter S. Benedict: The expectation is that the.
Peter S. Benedict: The technology the design talent.
Peter S. Benedict: Talented team that will put behind that really will be to build out a larger yeti portfolio and take advantage of this upfront and commercialization engine. We have I think with each acquisition that are also nuances specifics there or are there areas, where the mystery ranch brand has incredible relevance and credibility.
Mike McMullen: Number one, like we said, we felt it was appropriate to factor in some level of caution for the year, given it's our first outlook and as we look at the current environment. Second, there's both – there's 200 basis points from M&A, but I think it's important to know that there could be some interplay between the Mystery Ranch bags business and our bags business. But as we look at the other pillars that could drive growth, I mean, international, which we expect to be a driver of growth next year. At a category level, we'll expect C&E to grow slightly faster than drinkware, really, you know, and I think one of the big factors there is getting the soft coolers back out, which we're really excited about.
Peter S. Benedict: Continue to Stoke and foster that because I think that's important for.
Peter S. Benedict: Both storytelling innovation, how we build out how we build out the overall portfolio, but but really when we think about M&A. It's not the beginning of a building a house of brand strategy, It's really how we build.
Peter S. Benedict: Their needs are what we believe is is the potential on the Tam for yeti.
Peter S. Benedict: I think when we think about the.
Peter S. Benedict: Growth algorithm I'll go back to what I said in response to Brooks' question. The building blocks, we believer there thats how were investing behind the business. That's how we're building the team that's the focus from our product engine and from a commercialization and globalization, Joe we're not updating our long term growth algorithm on this call are right now but.
Mike McMullen: And then, you know, from a channel perspective, we've got growth across both wholesale and D2C. So I think the real important part for us and what we really want to call out is that it's a broad-based growth story across our entire business, channels, categories, geographies. And, you know, we're focused on delivering this year. Great, thanks so much. I'll pass.
Peter S. Benedict: I wanted to convey those are the building blocks as we think about this business getting to double digit and back to double digit growth.
Peter S. Benedict: The next question comes from Peter Benedict with Baird. Please go ahead. Oh, hey, guys. Thanks for your questions. First one, just on the new brand or the M&A that's happening, is your plan to kind of run out those products under their legacy brands? Are you going to flip them to YETI? Are they going to have the legacy brand by YETI? What's the approach there?
Got it understood. Thanks, and then my second question is.
Speaker Change: As around kind of sourcing in the inbound freight you had mentioned.
Speaker Change: Some some inbound freight considerations given given what's gone on the Red Sea.
Speaker Change: Can you talk a little bit about how you've you've worked.
Speaker Change: Contract versus spot mix I know historically, you've done a lot of spot that's still the case.
Matthew J. Reintjes: And Matt, maybe how you're thinking about that kind of longer term. And, as you mentioned, kind of some building blocks that would support double digit growth longer term for the YETI brand. Is that to say that you think that the 10 to 15% top line algo is still the right way to think about the business longer term, and that that's inclusive of, you know, M&A and wholesale distribution gains, etc., both domestically and internationally? That's my first question. The Bulletproof Executive 2013, Hey Peter. Good morning.
Speaker Change: And then just remind us your sourcing mix, where your products are coming from.
Speaker Change: Tariffs have become a discussion topic in the market I recall last time some of your salt products coming from China, and there were tariffs. We know you think whereas there, but maybe give us an update on where you are sourcing with specific to that what's coming out of China today. Thank you.
Speaker Change: Hey, Peter It's Mike I'll take the first question and thanks for the question So I would see on the.
Mike: The Red Sea, it's something we're watching very closely.
Matthew J. Reintjes: You know, I would say when we think about... M&A, and we talk about it as product expansionary. Part of the thesis is the ability to leverage the halo of the YETI brand, the commercial go-to-market platforms that we've built, and the global expansion we have. I think in the near term, I would expect us to operate these acquisitions, and particularly Mr. Ranch and YETI, in 2024, largely as they are while we work on the integration. But as we think about forward roadmapping, I think the expectation is that the technology, the design, the talent, and the team that we'll put behind us really will be to build out a larger YETI portfolio and take advantage of this front-end I think with each acquisition, there are also nuances and specifics. For example, there are areas where the Mystery Ranch brand has incredible relevance and credibility.
I do think our inbound freight.
Mike: Container cost savings are going to be the primary driver of our margin story. This year just like in 2023.
Mike: We did factor in some some offset due to the situation in the Red Sea.
Mike: From a contracting I I would say.
Mike: A large piece of our of our rates are contracted but there can be certain surcharges. They get caught that get charged when something like this happens so that that's why you can see.
Mike: Some higher rates get charged but.
Mike: I think the caution that we talked about in our outlook our outlook in applies both top line and margins, we feel really good about delivering the gross margin that we.
That we put out today.
Mike: Given all the factors involved the freight lower freight cost product cost savings.
The situation.
Mike: That we talked about in the Red sea as well as the hard cooler pricing changes that Matt talked about.
Matthew J. Reintjes: We'll continue to stimulate and foster that because I think that's important for both storytelling and innovation, how we build out the overall portfolio. But really, when we think about M&A, it's not the beginning of building a house of brand strategy. It's really how we build underneath what we believe is the potential and TAM for YETI. I think when we think about the growth algorithm, I'll go back to what I said in response to Brooke's question.
Matt: Yes, I think the the thing I would add Peter is the majority of any disruption we see on the Red Sea direct disruption is primarily in support of our European business. The majority of our freight lanes.
Matt: They come to the U S don't.
Matt: We don't expect to see that direct disruption.
Matt: Do you read about in the news I think when it comes to tariffs at the risk of it.
Matt: Over speculating on what could be the thing I would point to is the way we handled it back in 2018, when when the China tariffs it.
Matthew J. Reintjes: The building blocks, we believe are there. That's why we're investing in the business. That's how we're building the team.
Had a significant change in our supply base since 2018, it didn't kind of well documented.
Matthew J. Reintjes: That's the focus from a product engine and from a commercialization and globalization perspective. We're not updating our long-term growth algorithm on this call or right now, but I wanted to convey those are the building blocks as we think about this business getting to double-digit and back to double-digit growth. Got it, understood, thanks.
Evolution of our soft goods business, primarily out of China in response to that.
Matt: And I think as our as our sourcing level has evolved we've moved things to North America, we've moved things throughout southeast Asia.
Matt: Still have a primary source base of drink were in China.
Mike McMullen: And my second question is around kind of the sourcing and the inbound freight. You've mentioned some inbound freight considerations, given what's gone on in the Red Sea. Can you talk a little bit about how you've worked your contract versus spot mix?
Matt: But as we've indicated we've been working since.
Matt: Before 2018 on alternative locations to augment our drink Ware and we're successfully.
Mike McMullen: I know historically, you've done a lot of spot; that's still the case. And then just remind us of your sourcing mix, where your products are coming from. You know, tariffs have become a topic of discussion in the market. I recall last time some of your soft products were coming from China, and they were tariffed. We know your drinkware is there, but maybe give us an update on where you're sourcing and, specifically to that, what's coming out of China today. Thanks. Hey Peter, it's Mike.
Matt: <unk> product today outside of China for drink Ware.
Matt: But China is still the primary basis for our drink or business I think the thing I would take away from it is two things one.
Matt: Regardless of what May come we continue to evolve and diversify our supply base. That's part of the mission of our supply chain operations team.
Matt: Thing is.
Matt: When these things happen, we have a playbook and we were successfully ran it back in 2018, we would anticipate doing the same thing if they were to come.
Matt: The next question comes from Peter Keith with Piper Sandler. Please go ahead.
Mike McMullen: I'll take the first question, and thanks for the question. So I see on the Red Sea. It's something we're watching very closely. We do think inbound freight container cost savings are going to be the primary driver of our margin story this year, just like in 2023. However, we did factor in some offset due to the situation in the Red Sea. From a contracting standpoint, I would say, you know, A large part of our rates are contracted, but there can be certain surcharges that get charged when something like this happens.
Peter Jacob Keith: Oh, Thanks, good morning, everyone.
Peter Jacob Keith: Just looking at wholesale you've talked all year about.
Peter Jacob Keith: Sell through outpacing sell in I guess, how is the gap between those two trending is that is that widening or narrowing and even on that sell through trend is that softened with the cooler weakness or or has that started to pick up as the 2023 progressed.
Speaker Change: Hey, Peter.
Peter: For the question, so I would say.
Mike McMullen: So that's why you can see some higher rates get charged. But I think the caution that we talked about in our outlook applies both to the top line and to the margins. We feel really good about delivering the gross margin that we need and that we put out today, given all the factors involved, the freight, lower freight costs, product cost savings situation that we talked about in the Red Sea, as well as the hard cooler pricing changes that Matt talked about. Yeah, I think the thing I would add, Peter, is the majority of any disruption we see on the Red Sea is direct disruption is primarily in support of our European business, while the majority of our freight lanes that come to the US don't. We don't expect to see that direct disruption that you read about in the news.
Peter: And like we said in our prepared remarks sell through.
Peter: Growth, which is really just in the U S was positive.
Peter: And it was really strong in drink, where some of the dynamics, we talked about with coolers applied on a sell through basis as well.
Peter: The gap and you're right. We've talked about this all year long, where there's been a gap between sell through and sell in a lot of that was driven by.
Peter: Coming out of last holiday season, and we talked about this being a little the channel being a little higher on inventory and are seeing some some caution from some of our retail partners.
Peter: The gap significantly narrowed in Q4, and we would expect that to sort of continue as we go into 2024, given we feel really good.
Matthew J. Reintjes: You know, I think when it comes to tariffs, there's a risk of over-speculating on what could be. The thing I would point to is the way we handled it back in 2018 when the Chinese tariffs hit. We've had significant changes in our supply base since 2018 and a kind of well-documented evolution of our soft goods business, primarily out of China, in response to that. And, you know, I think as our sourcing level has evolved, we've moved things to North America. We've moved things throughout Southeast Asia. You know, we still have a primary source base of drinkware in China.
Peter: We feel really good about our inventory position coming out of this holiday season, and we'd expect to stay more in balance as.
Peter: As we go through this year.
Speaker Change: Okay helpful and then.
Speaker Change: Maybe just sticking on the.
Speaker Change: The cuda weakness understanding.
Speaker Change: The bigger ticket category I guess is there an element there with coolers and specifically hard coolers, where theres, maybe a little bit of lack of newness from the last 12 months.
Speaker Change: That may have pressured that category more so than the others in the portfolio.
Speaker Change: Thanks, Peter Good morning.
Speaker Change: Say.
Peter: We launched some really exciting products late last year in our wheeled coolers.
Matthew J. Reintjes: But as we've indicated, we've been working since and actually before 2018 on alternative locations to augment our drinkware, and we're successfully sourcing product today outside of China for drinkware, but China is still the primary base for our drinkware business.
Peter: Two larger to larger sizes, a little higher price point and the overall stack of our coolers kind of on the higher end of what we'd consider our consumer pricing.
Speaker Change: We feel great about those we feel great about those products, they really sort of settled into the market.
Matthew J. Reintjes: I think the thing I would take away from it is two things. One, regardless of what may come, we continue to evolve and diversify our supply base. That's part of the mission of our supply chain operation. The second thing is that when these things happen, we have a playbook, and we successfully ran it in 2018. We would anticipate doing the same thing if they were to come. Operator The next question comes from Peter Keith with Piper Sandler. Please go ahead. Oh, thanks. Good morning, everyone.
Speaker Change: In 2023.
Speaker Change: They were part of the growth story for the first nine months, but really the portfolio performed.
Speaker Change: In the first nine months. So Q4 was was the outlier for US I think as you heard on the call.
Speaker Change: We got some things coming this year that we're really excited about both in what they address from a consumer need perspective.
Speaker Change: The price points, they hit while still maintaining.
Speaker Change: As we would be getting premium and being something that is both highly functional.
Peter Jacob Keith: Just looking at wholesale, you've talked all year about sell-through outpacing sell-in. I guess, how is the gap between those two trending? Is that widening or narrowing?
Speaker Change: And durable and delivered all the performance we want so I think youll see that in.
Speaker Change: Wheeled cooler solution that we talked around or talked about on the call and I think you're going to see it in some other some other coolers later as we go into the year, so feel great about the rounding out of a lineup.
Mike McMullen: And even on that sell-through trend, is that softened with the cooler weakness, or has that started to pick up as 2023 progresses? Hey, Peter, thanks for the question. So I'd say, like we said in our prepared remarks, sell-through growth, which is really just in the U.S., was positive, and it was really strong in drinkware. Some of the dynamics we talked about with coolers applied on a sell-through basis as well. The gap, and you're right, we've talked about this all year long, where there's been a gap between sell-through and sell-in, a lot of that was driven by coming out of last holiday season, and we talked about this being a little, the channel being a little higher on inventory and us seeing some caution from some of our retail partners. The gap significantly narrowed in Q4, and we would expect that to sort of continue Okay, that was helpful.
Speaker Change: Hard coolers, I think soft coolers really being back in full force with a full assortment and a full.
Speaker Change: But kind of addressing of color range.
Speaker Change: I think it's a great thing and then getting back and tell them to consumers.
Speaker Change: And ready to go I mean that has been a that was a highlight product for us as we wrap 2022, and obviously 2023 we had the <unk>.
The voluntary recall, but we're ready to get back at it with the with the soft coolers and I think you'll see us you'll see us.
Speaker Change: A little a little louder out there about the soft coolers and really getting after the hard cooler new product launches this year.
Speaker Change: The next question comes from Robbie <unk> with Bank of America. Please go ahead.
Robbie: Oh, Hey, Matt.
Robbie: So I wanted to follow up on the M&A strategy. Since I think this is the first chance we've had to really hear you talk about it so.
Robbie: A couple of things can you are you when you're making these acquisitions and maybe future acquisitions is there significant IP and mystery ranch or.
Matthew J. Reintjes: And then maybe sticking on the cooler weakness, understanding it's a bigger ticket category, I guess, is there an element there with coolers, and specifically hard coolers, where there's maybe a little bit of a lack of newness from the last 12 months that may pressure that category more so than others in the portfolio? Thanks, Peter. Good morning.
Speaker Change: We're butter Pat.
Speaker Change: That's applicable to the Yeti line is sort of like an IP story behind some of these acquisitions and does that.
Speaker Change: What you are looking at a lot and future acquisitions and.
Speaker Change: The U S. You guys have mentioned the play between mystery Ranch in Yeti, there's something to say can you elaborate a little more on that like do we should expect yeti to be a little softer maybe in certain places because of the mystery Ranch acquisition I just wanted to get more clarification on that.
Matthew J. Reintjes: You know, I would say we launched some really exciting products late last year in our wheeled coolers in two larger sizes, at a little higher price point in the overall stack of our coolers, kind of on the higher end of what we consider our consumer pricing. We feel great about those. We feel great about those products. They really sort of settled into the market in 2023. You know, they were part of the growth story for the first nine months, but really, the portfolio performed well in the first nine months. So Q4 was an outlier for us.
Speaker Change: Okay.
Speaker Change: Oh, sorry, thanks, Thanks, Robert Yeah, I would say whenever we talked a little bit about this but whenever we look at.
Matthew J. Reintjes: You know, I think, as you heard on the call, we've got some things coming this year that we're really excited about, both in what they address from a consumer need perspective, the price points they hit, while still maintaining, as we would, the YETI premium and being something that is both highly functional and durable and delivers all the performance we want. So I think you'll see that in the wheeled cooler solution that we talked about on the call, and I think you're going to see it in some other coolers later as we go into the year. So I feel great about the rounding out of the lineup on hard coolers.
Speaker Change: M&A through the lens of products, which is really what we're what we're doing here.
Speaker Change: We're looking for talent acquisition, and what I would call a.
Speaker Change: Technology or designs in and kind of technology and designs in in conjunction.
Speaker Change: For what they bring that we think is a differentiated point of view that Leverages Bowl and its scalable so when I think about the mystery ranch.
Speaker Change: Acquisition, and when you think about the yeti product portfolio today and backs we have high end waterproof.
Matthew J. Reintjes: I think soft coolers really being back in full force with a full assortment and a full kind of addressing of the color range, I think is a great thing. And then getting back and telling the consumers they're back and ready to go. I mean, that was a highlight product for us as we wrapped 2022, and obviously, 2023 we had the voluntary recall, but we're ready to get back at it with the soft coolers. And I think you'll see us a little louder out there about the soft coolers and really getting after the hard cooler new product launches this year. The next question comes from Robbie Ohmes with Bank of America. Please go ahead. Oh, hey Matt.
Speaker Change: Fully submersible packs that have been.
Speaker Change: It's been a wonderful part of the Yeti story.
Speaker Change: Expanded into.
Speaker Change: Kind of higher end everyday everyday packs Mr. Vance really brings two things that I think are important one impacts one is carry any other ones access how you how you use the product and there are some things around the mystery ranch designs.
Speaker Change: Better protected pool and have been protected that we really really like it.
Speaker Change: Around the carry and around the access and design that we think has the potential to be really audible scalable.
Speaker Change: Identifiable as you think about building out building out the <unk> brand. So it is it is something that as we look at acquisitions.
Robert Ohmes: So I wanted to follow up on the M&A strategy since I think this is the first chance we've had to really hear you talk about it. So, you know, a couple things. Can you, are you, when you're making these acquisitions and maybe future acquisitions, is there significant IP, you know, in Mystery Ranch or, you know, or Butter Pat that's applicable to the YETI line? Is there like an IP story behind some of these acquisitions? And is that something you're looking at a lot in future acquisitions, and, you know, you guys have mentioned the play between Mystery Ranch and YETI as something to think about. Can you elaborate a little more on that? Like, should we expect YETI to be a little softer maybe in certain places because of the Mystery Ranch acquisition? I just want to get more clarification on that. Thank you. Oh, sorry.
Speaker Change: Technology design talent are really the three big things because we are thinking about this like additions to our product development engine.
Speaker Change: As it relates to the interplay between.
Speaker Change: Yeti legacy bags and the mystery Ranch packs I think what Mike was expressing is we just don't know exactly how they will how the interplay.
Speaker Change: And kind of when you do this you create awareness around the category and so as we bring those assortment together.
Speaker Change: There's going be some moving parts in there just can be some some SKU rationalization, there's going to be some price point rationalization, there's going to be kind of building up that assortment. So I think we just went into the year with a little bit of.
Being thoughtful about how we how we plan for it in year, one and then in year two we.
Matthew J. Reintjes: Thanks. Thanks, Robbie. Yeah, I would say, whenever we talked a little bit about this, but whenever we look at M&A through the lens of products, which is really what we're what we're doing here, we're looking for talent acquisition and what I would call technology or designs and kind of technology and designs in conjunction for what they bring that we think is a differentiated point of view that's leverageable and that's scalable. So, when I think about the Mr. Ranch.
Speaker Change: We expect we expect to kind of build out a more robust portfolio.
Speaker Change: Got you that's really helpful. And then Mike I just wanted to clarify on the 2020 for guidance.
Speaker Change: Just a couple quick things would do you expect to Amazon.
Speaker Change: To be a growth driver should it be balanced growth support from Amazon and Yeti online in 2024, similar to 2020 free or would you be leaning on.
Matthew J. Reintjes: Acquisition, I mean, you think about the YETI product portfolio today in bags. We have high-end, waterproof, fully submersible packs that have been a wonderful part of the YETI story. We've expanded into kind of higher-end, everyday packs. Mystery Ranch really brings two things that I think are important. One in packs, one is carry, and the other one's access, how you use the product.
Mike: One channel more than another and then the other clarification when we get just the on the non wheeled coolers and pricing and things like that is there a need for inventory clearance and some of the legacy non wheeled large ticket coolers and we might see you guys showing up with those I know a long time ago, you guys had shown.
Matthew J. Reintjes: And there are some things around the Mystery Ranch designs that are protectable and have been protected that we really like around the carry and around the access and design that we think has the potential to be really ownable, scalable, and identifiable as you think about building out the pack brand. So it is something that, as we look at acquisitions, technology, design, and talent are really the three big things because we are thinking about these like additions to our product development engine. You know, as it relates to the interplay between YETI legacy bags and the Mystery Ranch packs, I think what Mike was expressing is that we just don't know exactly how they'll interplay. And kind of when you do this, you create awareness around the category, and so as we bring those that assortment together, you know, there's gonna be some moving parts in there. There's gonna be some, some ski rationalization.
Mike: In the off price channel with some soft cooler bags with the zipper that wasn't that great, but any anything like that we should anticipate for 2024.
Ravi: Hey, Ravi so.
Ravi: Thanks for the questions.
Ravi: First on the D to C.
Ravi: Sub channels, we expect relatively balanced growth across our own E Commerce, Amazon corporate sales the three major ones.
Ravi: Amazon, Obviously, you had a really really strong year in 2023 and that was a a big part of the SG&A story in 2023 as we go into 2024, we expect that.
Ravi: To be more balanced.
Ravi: As we think about your second question around inventory I mean, just to be clear what we talked about was as we're introducing new products.
Matthew J. Reintjes: There's gonna be some price point rationalization. There's gonna be kind of building up that assortment. So I think we just went into the year with a little bit of thoughtfulness about how we plan for it in year 1 and then in year 2. We expect to kind of build out a more robust portfolio. Gotcha, that's really helpful.
Ravi: Yes.
Ravi: Seen us do this before we will change our pricing stack to just make sure that the that the entire portfolio makes sense as we look at price versus value and so that's really what's happening here.
Robert Ohmes: And then, Mike, I just wanted to clarify on the 2024 guidance, you know, just a couple quick things. Do you expect Amazon to be a growth driver? Should it be balanced growth support from Amazon and YETI Online in 2024, similar to 2023? Or would you be leaning on, you know, one channel more than another?
There are.
Ravi: Just to directly answer the question, there's really no inventory clearance risk as we look out through the year.
Ravi: <unk> seen us from time to time.
Ravi: <unk>.
Ravi: Take things end of life as we introduce new innovation, but.
Ravi: As we look out for the year I, there's I wouldn't call out any significant risk for it.
Mike McMullen: And then the other clarification we get, just on the non-wheeled coolers and pricing and things like that, is there a need for inventory clearance on some of the legacy non-wheeled large ticket coolers? And we might see you guys showing up at those. I know a long time ago, you guys showed up in the off-price channel with some soft cooler bags with a zipper that wasn't that great. But anything like that, we should expect in 2024. Hey, Robbie, so, thanks for the questions. First on the D2C.
Ravi: It's significant in their end of life risk, that's any different than what we've done in the past.
Ravi: The next question comes from Jim Duffy with Stifel. Please go ahead.
James Vincent Duffy: Well thank you.
James Vincent Duffy: I wanted to ask about the hardcore category.
James Vincent Duffy: Question is what gives you the confidence that the pressures are related to the macro versus simply maturity of the category and perhaps saturation of the addressable market. After a number of strong years of sales.
James Vincent Duffy: Hey, Jim This is Matt thanks for the question.
Robert Ohmes: Subchannels, we expect relatively balanced growth across our own e-commerce, Amazon, and corporate sales, the three major ones. Amazon obviously had a really, really strong year in 2023, and that was a big part of the SG&A story in 2023. As we go into 2024, we expect those to be more balanced. As we think about your second question around inventory, I mean, just to be clear, what we talked about was, you know, as we're introducing new products, you've seen us do this before. We'll change our pricing stack to just make sure that the entire portfolio makes sense as we look at price versus value, and so that's really what's happening here. There are, I would just directly answer the question.
Matt: I think that's a that's a question that we've been answering for years on how many more hard coolers can you sell in obviously, we've been selling hard cooler since 2006.
Matt: We've continued to drive growth in that I think the thing that was most interesting. It's why we were trying to be very clear about that dynamic as we had nine months of very strong consumer demand in hard coolers, and we saw a pretty acute change in the fourth quarter and.
Matt: When we go back through.
Matt: Our.
Matt: Continued improving in what I think are pretty powerful consumer analytics and data analytics capabilities now really we started to piece apart the dynamic that came to play in Q4.
Mike McMullen: There's really no inventory clearance risk as we look out for the year. You know, we take things end-of-life as we introduce new innovation, but as we look out for the year, I wouldn't call out any significant end-of-life risk that's any different than what we've done in the past. The next question comes from Jim Duffy with Defo. Please go ahead.
Matt: We look at the market opportunity, we look at the consumers that own a yeti coolers visa V consumers that know the yeti brand or own yeti drink, where we look at the global opportunity that remains untapped in hard coolers.
Matt: The price points that we still haven't filled in the mobility solutions as we've talked about with this wheeled cooler and we believe that hard coolers has continued into significant place for yeti going forward. So I think that that.
James Vincent Duffy: Well, thank you. I wanted to ask about the hardcore category. The question is, what gives you the confidence that the pressures are related to the macro versus simply maturity of the category and perhaps saturation of the addressable market after a number of strong years of sales? Hey Jim, this is Matt.
Matt: Challenge that consumer dynamic.
Matt: We saw I think the biggest thing for US was just how quickly that changed from nine months of a really strong really strong performance.
Matthew J. Reintjes: Thanks for the question. You know, I think that's a question that we've been answering for years, on how many more hard coolers we can sell. And, obviously, we've been selling hard coolers since 2006, and we've continued to drive growth in that. I think the thing that was most interesting, and why we were trying to be very clear about that dynamic, is that we had nine months of very strong consumer demand for hard coolers, and we saw a pretty acute change in the fourth quarter. And, you know, when we go back through our continued improvement in what I think are pretty powerful consumer analytics and data analytics capabilities now, really, we started to piece apart the dynamic that came to play in Q4.
Speaker Change: Thank you, Matt and then.
Speaker Change: <unk> category it seems like all the exciting opportunity there, including luggage ranges are great additions to the team and he knows the category well.
Speaker Change: Curious, how you see leveraging mystery ranch I think of them as being depreciated by hunters, who are carrying heavy loads do you see the opportunity and expanding that capability to the yeti line or is there opportunity leveraging the sea ranch into broader categories like those occupied by Osprey and others perhaps.
Speaker Change: The larger addressable audience.
Speaker Change: <unk>.
Matthew J. Reintjes: You know, we look at the market opportunity, we look at consumers that own a YETI cooler vis-a-vis consumers that know the YETI brand or own YETI drinks, and we look at the global opportunity that remains untapped in hard coolers, the price points that we still haven't filled, and the mobility solutions, as we talked about with this wheeled cooler. And we believe that hard coolers will have a continued and significant place for YETI going forward. So, you know, I think that challenge, that consumer dynamic that we saw, I think the biggest thing for us was just how quickly that changed from nine months of really strong performance. Thank you, Matt. And then the PACS category seems like a lot of exciting opportunities there, including luggage. Lane's a great addition to the team.
Speaker Change: Yes, I would say, thanks, Jim and it's a great.
Speaker Change: It's a great question, a great great insight.
Speaker Change: Mr. <unk> is known for their carry systems, and what I mentioned earlier.
Speaker Change: <unk> question was.
Speaker Change: Cary and access are two hugely important things and driving differentiation impacts and so we see we.
Speaker Change: We see with lanes leadership and the talented team we now have in Bozeman with the talent incredibly talented team we have in Austin and.
Speaker Change: The ability to really become not only a big player in a relevant player in outdoor broadly, but also everyday carry and I think that's where a mystery ranch as a brand had made a little bit move there.
Matthew J. Reintjes: He knows the category well. Curious how you see leveraging Mystery Ranch. I think of them as being appreciated by hunters for carrying heavy loads.
Speaker Change: But there but their legacy history was really tied into those those heavy hauling heavy carry environments and so that's why we thought incredibly complementary and we think those technologies and those designs.
Matthew J. Reintjes: Do you see the opportunity in expanding that capability to the YETI line, or is there an opportunity to leverage Mystery Ranch into broader categories like those occupied by Osprey and others, perhaps with larger adjustable audiences? Yeah, I would say, thanks, Jim. And it's a great question. Great, great insight. Mystery Ranch is known for their carry systems. And what I mentioned earlier, and I believe Robbie's question was, you know, carry and access are two hugely important things in driving differentiation impacts. And so we see, with Lane's leadership, and the talent and team we now have in Bozeman, and the talent, incredibly talented team we have in Austin, the ability to really become not only a big player and a relevant player in outdoor broadly, but also everyday carry. And I think that's where Mystery Ranch as a brand made a little bit of a move there. But their legacy history was really tied to those heavy hauling, heavy carry environments.
Speaker Change: Our leverage bowl and have more broad more scalable application.
Speaker Change: The next question comes from Noah <unk>.
Noah: With Keybanc capital markets. Please go ahead.
Noah: Hi, Thanks for taking my question.
Noah: The comments around balanced channel growth. This year, how should we think about the mix between DTC and wholesale looking longer term.
Noah: The current mix kind of the right way to think about the business or where would you expect to reaccelerate DTC relative to wholesale in 2025 and beyond.
Noah: Yeah.
Speaker Change: Hey, Thanks for the thanks for the question. So you're correct. So we expect the two channels to grow.
Speaker Change: It's relatively in line with each other this year, but there.
Speaker Change: There's really two there's really one thing I'd call out in that in year, one of mystery Ranch, we expect a higher mix of <unk>.
Matthew J. Reintjes: And so that's why we saw it incredibly complementary. And we think those technologies and those designs are leverageable and have more broad, more scalable applications. The next question comes from Noah Zaskin with KeyBank Capital Markets. Please go ahead.
Speaker Change: Wholesale versus direct so that's one factor that is driving them to kind of grow more in line with each other.
Speaker Change: But over the long term, we believe that D C will grow faster than wholesale.
Noah Zaskin: Hi, thanks for taking my question. What are the comments around balanced channel growth this year? How should we think about the mix between DTC and wholesale looking longer term? Is the current mix kind of the right way to think about the business? Or would you expect to reaccelerate DTC relative to wholesale in 2025 and beyond? Thanks.
Speaker Change: And not only just with our investments in and D to C across both.
Speaker Change: E Commerce and corporate sales strategic partnership stores et cetera, but also as we look outside the U S. We don't have that full complement of.
Speaker Change: D to C channels.
Mike McMullen: Thanks for the question. So, correct. So, we expect the two channels to grow relatively in line with each other this year, but there's really two things I'd call out. In year one of Mystery Ranch, we expect a higher mix of wholesale versus direct, so that's one factor that is, you know, driving them to kind of grow more in line with each other. But over the long term, we believe that D2C will grow faster than O2C. And not only just with our investments in D2C across both e-commerce and corporate sales, strategic partnerships, stores, etc., but also as we look outside the U.S., we don't have that full complement of D2C channels in the other regions where we're operating, Europe, Canada, Australia. So as we look to build out those other D2C channels within those new regions, we think that's going to help drive faster growth in Thank you. The next question comes from Megan Alexander with Morgan Stanley. Please go ahead. Hi, thanks very much.
Speaker Change: In the other regions, where we're operating.
Speaker Change: Europe, Canada, Australia, so as we look to build out those other D to C.
Speaker Change: Channels within those new regions, we think that's going to help drive faster growth in DTC over the long term.
Speaker Change: Thank you.
Speaker Change: The next question comes from Michael <unk> with Morgan Stanley. Please go ahead.
Michael: Hi, Thanks, very much I, just wanted to maybe touch on the new price points and cooler you've been pretty steadfast in wanting to maintain the premium positioning. So I guess, how should we think about introducing some lower price point your comment on marketing and how you kind of balance that with.
Michael: With the strategy to maintain our premium position.
Speaker Change: Hi, Megan thanks. Thanks for the question what I would say is we do not plan to introduce a price point that is a new price point is.
Megan: Approximately for yeti being a place we've not been before so this is not I wouldn't expect to see.
Megan Alexander: I just wanted to maybe touch on the new price points and coolers. You know, you've been pretty steadfast in wanting to maintain the premium positioning. So I guess, you know, how should we think about introducing some lower price points, your comments on marketing, and how you kind of balance that with the strategy to maintain a premium position? Hi Megan.
Megan: A significant step down from any sort of pricing. This would just would make a lot of sense from from bottom to top.
Megan: So it's a price point, we'd been at before.
Okay that makes lot of sense and then maybe just a follow up on maybe necessary ranch in particular can you just any more color on maybe the margin profile of that business and what growth has maybe it looks like for that business over the last year.
Matthew J. Reintjes: Thanks for the question. What I would say is we do not plan to introduce a price point that is a new price point, an entry price point for YETI, being a place we've not been before. So this is not – I wouldn't expect to see a significant step down from any sort of pricing. This would make a lot of sense from bottom to top. So it's a price point we've been at before. Okay, that makes a lot of sense. And then maybe just a follow up on maybe Mystery Ranch in particular.
Megan: Tim.
Tim: Hey man, so we didn't disclose any.
Tim: Specifics on the mystery Ranch business.
Tim: Other than to say, what we believe the two acquisitions will provide this year from a total growth standpoint.
Tim: And then we said that that they were slightly EPS accretive but beyond.
Tim: Beyond that.
Tim: I'd say from a from a margin profile it doesn't have a.
Mike McMullen: Can you give us any more color on maybe the margin profile of that business? And you know, what growth has maybe looked like for that business over the last year or two? Hey Megan.
Obviously, we didn't call it out as a significant driver of this year and so I would not expect to you know.
Tim: A we don't expect a significant impact from that in 2024, but I mean like Matt said, we think theres significant opportunity to grow that business.
Mike McMullen: So, you know, we didn't disclose any specifics on the Mystery Ranch business other than to say what we believe the two acquisitions will provide this year from a total growth standpoint, and then we said that they were slightly EPS accrued, but beyond that, you know, I'd say from a margin profile, it doesn't have a. Obviously, we didn't call it out as a significant driver this year. And so I would not expect We don't expect a significant impact from that in 2024, but like Matt said, we think there's a significant opportunity to grow that business and the overall BAGS business, both from a wholesale and a D2C standpoint, and then also both inside the U.S. and international as well. I would just add one thing, Megan.
Tim: And the overall bags business and you know both from a wholesale and DTC standpoint, and then also both inside the U S and international as well.
Speaker Change: Just add one thing there is nothing about.
Speaker Change: So those packs structurally that's fundamentally different than than yeti packs, and I think as we evolve and grow and fit to channels to market.
Speaker Change: Those are all part of our thesis on the opportunity that we see.
Speaker Change: The next question comes from Brian Mcnamara with Canaccord Genuity. Please go ahead.
Brian McNamara: Good morning, guys. Thanks for taking our question I just have one I was hoping you could comment on what youre seeing in terms of competitive dynamics and drink were given a competitor's recent emergence in your view is that competitor or good for the category as it appeals to perhaps a different demographic or do you expect competitive pressures to increase from here. Thank you.
Matthew J. Reintjes: There's nothing about those PACs structurally that's fundamentally different from YETI PACs, not because we evolve and grow and fit to channels to market. Those are all part of our thesis on the opportunity that we see. The next question comes from Brian McNamara with Canaccord Genuity. Please go ahead.
Brian McNamara: Good morning, guys. Thanks for taking our questions. I just have one.
Speaker Change: Thanks, Bryan I would say.
Matthew J. Reintjes: I was hoping you could comment on what you're seeing in terms of competitive dynamics and drinkware, given a competitor's recent emergence. In your view, is that competitor good for the category? Does it appeal to perhaps a different demographic?
Speaker Change: Yeti has dealt with competitors coming into our broadly defined space since our very beginning and everything going back in history from private labels Knockoffs me two's.
Matthew J. Reintjes: Or do you expect competitive pressures to increase from here? Thank you. Thanks, Brian.
Speaker Change: Brands brands entering.
Speaker Change: I think that the recent activity in drink Ware really fits in with a macro theme that we're seeing which is an awareness around health and wellness hydration.
Matthew J. Reintjes: You know, I would say YETI has dealt with competitors coming into our broadly defined space since our very beginning, and everything going back in history from private labels, knockoffs, me-tos, brands, and brands entering. You know, I think that the recent activity in drinkware really fits in with a macro theme that we're seeing, which is an awareness around health and wellness hydration. So, I think that sometimes competition brings awareness to a category and creates market opportunities. Obviously, you know, we announced today that we have a billion-dollar drinkware business that had strong growth in the fourth quarter, and I think we not only appeal to a broad and diverse and growing broad and diverse audience, but we also have a diverse assortment, and we're covering a wide range within drinkware and these expansion areas underneath drinkware that we're So, you know, I think I wouldn't say unilateral competition is bad.
Speaker Change: So I think that sometimes competition brings awareness to a category and creates a market opportunity. Obviously, we announced today that we have a $1 billion drink ware business that had strong growth in the fourth quarter and I think we not only appeal to a broad and diverse and growing broad and diverse audience.
Speaker Change: But then we also have a diverse assortment and recovering.
Speaker Change: Wide range within drink wear in these expansion areas underneath drink or that we're getting into so.
Speaker Change: I think I wouldn't say a singular competition is bad I think attention to the category is good and I think our approach to it is long term and sustainable and I think the yeti brand.
Speaker Change: The way we built it has given us permission to touch a lot of different aspects.
Matthew J. Reintjes: I think attention to the category is good, and I think our approach to it is long-term and sustainable, and I think the YETI brand and the way we've built it have given us permission to touch a lot of different aspects and broader aspects within that category. Great, thank you. The next question comes from Zach Riddle with William Blair. Please go ahead.
Speaker Change: In broader aspects within that category.
Speaker Change: Great. Thank you.
Speaker Change: The next question comes from Zach <unk> with William Blair. Please go ahead.
Zach: Hi, so just.
Zach: Two quick questions here, but could you give us an update on the tractor supply rollout as far as maybe how many stores are kind of the breadth of product that's available within the stores.
Zach Riddle: Hi, so just two quick questions here, but could you give us an update on the tractor supply rollout as far as, you know, maybe how many stores or the kind of breadth of product that's available within the stores? And then, secondarily, on the wholesale front, with the acquisition of Mystery Ranch and Butterpath, could you just give us your thoughts on maybe the need for new wholesale door growth as you pursue bags and cookware growth a little bit more aggressively? Thanks. Hey Zach, and thanks for the question. So here's what I'd say about Tractor Supply.
Zach: And then secondarily on the wholesale front with the acquisition of Mystery Ranch and butter Pat.
Zach: Could you just give us your thoughts on maybe the need for a new wholesale door growth as we pursue bagged and cookware growth a little bit more aggressively.
Hey, Zack.
Speaker Change: And thanks for the question so.
Speaker Change: Here is what I'd say about tractor supply first.
Mike McMullen: You know, first of all, we started it in the second half of 2023, really pleased and excited about the opportunity. We've been saying since the beginning that this will be a gradual rollout. It's going to be phased both in terms of the number of doors as well as the assortment per door.
Speaker Change: Sure.
Speaker Change: We started it in the second half of this of 2023.
Speaker Change: Really pleased and excited about the opportunity.
Speaker Change: We've been saying since the beginning that this will be a key.
Speaker Change: Gradual rollout.
Speaker Change: Be phased both in terms of the number of doors as well as the assortment per door.
Mike McMullen: And so, we don't give specific dollars to individual customers, but, you know, what I'd say is, as we go out in 2024, any selling that we have is going to be backed up by sell-through. So, we'll have a – we'll feel really comfortable as we go through the year in terms of, you know, this is us capturing consumer demand. And as we've talked about many times, we want to make sure that we're expanding the opportunities to reach new customers in new places with new products. And this is just really part of that overall strategy.
And so we don't give specifics.
Speaker Change: For for individual.
Speaker Change: Customers.
Speaker Change: But what I'd say is as we go out in 2024.
Speaker Change: Any selling that we have is going to be backed up by sell through so.
Speaker Change: We'll have a we'll feel really comfortable as we go through the year in terms of.
Speaker Change: This is us capturing consumer demand and as we've talked about many times, we want to make sure that we're expanding the opportunities to reach new customers and new places with new products and this is just really just part of that overall strategy.
Matthew J. Reintjes: Yeah, Zach, and I would add that, as our portfolio continues to evolve, and even our existing portfolio today, it creates opportunities for additional wholesale partners domestically and globally. Our approach to wholesale expansion has always been really thoughtful and first and foremost focused on driving the productivity of our existing partners, and supporting our existing partners. We used to use the phrase consolidate around strength because we thought that was a great way to support that important part of our omni-channel. You know, I think as the portfolio grows, there will be opportunity, you know, probably less need than opportunity to go out and do that.
Speaker Change: Second I would add on the as our portfolio continues to evolve and even our existing portfolio today it creates opportunities for.
Speaker Change: Additional wholesale partners domestically and globally.
Speaker Change: Our approach to wholesale expansion has always been really thoughtful and first and foremost focused on driving the productivity of our existing partners supporting our existing partners.
Speaker Change: We used to use the phrase of consolidate around strength.
Speaker Change: Because we thought that was a great way to support that important part of our of our omni channel I think as the as the portfolio grows.
Speaker Change: There will be opportunity.
Speaker Change: Probably less need then opportunity to go out and do that and we've got a lot of success in the past working with our existing partners on expanding their assortment into categories that maybe they weren't naturally or historically in which is a great win and something that we would we would primarily focus on.
Matthew J. Reintjes: And we've had a lot of success in the past working with our existing partners on expanding their assortment into categories that maybe they weren't naturally or historically in, which is a great win and something that we would primarily focus on as we look at additional opportunities. I would like to turn the conference back over to Matt Reintjes for any closing remarks. Thank you, everyone, for joining us today. We look forward to updating you on our upcoming Q1 call, and have a wonderful rest of the week and weekend. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. BF-WATCH TV 2021 BF-WATCH TV 2021
Speaker Change: As we look at additional opportunities.
Speaker Change: This concludes our question and answer session I would like to turn the conference back over to Matt Ryan Schram for any closing remarks.
Speaker Change: Thank you everyone for joining today, we look forward to updating on our Q1 upcoming call and have a wonderful rest of the week and weekend.
The conference has now concluded okay. Great attending today's presentation you may now disconnect.
Speaker Change: [music].