Yeti Holdings Inc. won out during Covid-19 after its online sales took off, a good sign for any luxury retailer going forward, but some missteps mean sales might pleateau into the holiday season.
Yeti (NYSE: YETI) brought in record sales this summer and early fall as the Covid-19 pandemic encouraged customers to buy its high-end coolers and tumblers for outdoor socializing, one of the few activities that weren’t stopped during the pandemic.
While luxury retailers like Aldo and Brooks Brothers went bankrupt from store closures, Yeti saw fantastic growth online, as people decided to explore the outdoors after most other activities in the US closed. Yeti is one of the “pandemic stocks” like Lululemon and Home Depot, meaning its success has soared as consumers bought up quality items to last them throughout quarantine.
Yeti reported a record $1 billion in sales for the last one-year period in its third quarter earnings statement on November 5th, and hoped to cruise into winter with a steadier stock price.
But with wholesale retail partners seeing profits dip way down for the quarter, plus supply chain and product missteps, they may stall out into the holidays/
Thousands of lids for its Rambler Travel Mugs were recalled on November 4th. And the company has struggled to resupply after it cut back on stock at the start of economic shutdowns.
Yeti will have to course correct for several months.
“They hadn’t put those purchase orders back in place quick enough in order to make up for that demand. So they left some sales on the table. And they don’t want that to happen in 2021,” said Alex Maroccia, Yeti analyst of Berenberg.
The company eclipsed expectations during the pandemic with an already-in-place ecommerce setup and brand with broad appeal, and that has carried it through while other retailers struggled.
“Yeti’s fortunate to be one of the industry leaders in their vertical,” said Jared Watson, Professor of Marketing at NYU’s Stern School of Business.
Yeti Holdings reported growth even over 2019 in its third quarter earnings release on November 5th. Yeti reported third quarter earnings per share of $0.61, $0.24 beating analyst’s estimate of $0.37/. Overall share price has skyrocked above 80%. Net sales increased 29% to $294.6 million overall, compared to $229.1 million in the prior year period. Executives noted that wholesale had dipped by double digits. Yeti won’t know until the next quarter if summer sales were from one-time customers on yeti.com or Amazon.
“We continue to see a great mix of new versus existing customers and have maintained great engagement as a result of our targeted and relevant content,” said CEO Matt Reintjes in the November 5th earnings call.
Only two years into being a public company, Yeti must continue to keep supply chains and product safety secure if it hopes to break out as a company to last well beyond the COVID-19 pandemic.