YETI (YETI) 4 Aug 222022 Q2 Earnings call transcript

Good morning and welcome to 2Q FY 2022 Earnings Conference Call of YETI Holdings. All participants will be in listen-only mode. [Operator Instructions] Please note, this event is being recorded. I would now like to turn this conference over to Mr. Tom Shaw. to over and you you sir Thank

and Holdings' second morning, thanks for YETI discuss to us quarter joining Good XXXX results.

statements. Before we this to the forward-looking, differ that we remind you and various statements results to could forward-looking that like these begin, are uncertainties some and subject materially such statements make may call that on today be considered cause risks actual we'd to of from our

filed Form For We please recently in to by our filed risk X-K the future undertake to revise today. detailed and more or forward-looking factors XX-Q, with required a as law. update events, new information, refer result today obligation SEC information, Form otherwise, the or any as most the made of statements no except

use results website Today's will believe measures represent and President yeti.com. discussing be in Carbone, true accurately Paul call directly by they CFO. We non-GAAP and release as some non-GAAP financial morning's fiscal the measures today, business. to completed these be our of available are included Reconciliations most as Investor in to both more as as a their we performance operational Matt the our Reintjes, in the of of our our at Relations underlying are pertaining lead this we'll discussions periods. sections measures led supplement measures of call reconciliation, non-GAAP in of press which well CEO, GAAP certain comparable During and

I'd the for Following the like Matt. our your to now, to over questions. prepared turn remarks, And call call we'll open

to strong the XX% a and sales dynamic growth environment. Thanks for Tom and posted challenging YETI and continues what a good period, be morning. increase

the in annual high short these durability slightly brand. of continue the three-year of and show XX% the of growth compounded fell a we strength continue set, bar to of results demand While a to rate results

and channel to we performance coolers, and and freight sought gross lower a mix from channel product margin our further business inventory. the higher sell inbound towards several and of bottom-line, continue costs, as factors, shift support margin On through including our in pressure back the equipment near-term gross build wholesale

our is and for understand and our to the year the what and for it in XXXX beyond, growth are acknowledge As the balance execution important in set marketplace. seeing we consider of up we

remains domestic First, the our continues over we global past discussed brand support few years. and strong to the have and reach

to Second, as globally, market demand to and and to product proving wholesale, within for and growth are the due diversify even durable our escalate. DTC, traffic continues battle innovation digital channels

to to rates a costs, pressure Third, believe up margins, we heavily but we has impacted decreasing are set chain elevated costs continue forward tailwind for as freight seeing supply and potential are which inbound XXXX.

second the events, customers connecting with with at product the Lopez Mountain quarter ambassador brand brand, international Wine Games GoPro in in-person our with and storytelling, marketing, return of incredible as through is customers consumers. display Lee is YETI Colorado, have skateboarder we we With with Hole to attention Central Open, activations broad London, Food multifaceted the combined a world we Summer where coupled a enthusiasm brand strong to to differentiated a Day Jackson Mother's Louie Turning Father's with connection and & our with in getting power Copenhagen digital combined From Vail, premium. campaigns, of and and Chef activation in engagement in-person Day, the we're today's with and Tiernan excel. reach Even awareness.

in wholesale demand, YETI relates corporate quarter. very As performed it the retail to sales and our well

also reinforces YETI's digital position in contributing accounts in challenged and high wholesale It omnichannel and Marketplace e-commerce approach improved digital growth is important the be. slowdown continues seen including across Amazon importantly, through inventory traffic, year-over-year comps, for how were own our market. While sell by increasingly competitive our broader to an and very market this the full being channel. to key

convert, retain proving the target, a e-commerce capabilities analytics the and focus this to out side, rest investment is On to acquisition of year. build for central customers to the conversion, to remain while our and continues YETI improve retention

portfolio. executing the and are coolers, product new breadth hard On and bags, new we depth side, have across we Year-to-date, and apparel. our coolers, soft introduced products

through in As are we up both though and market, cut discounting, more the power we focused conveying new channel and starting product and and promotional sustained build market this through full marketing on to Even these our and awareness distribution see including sets innovative tactics more aggressive the noise. deeper product growth. we believe performance near we of for products, the long-term marketing to heightened are brands of well activity

our staying and Finally, supply to given match XXXX. supply across the into quarter management XXXX landscape and rest taking chain This business active in by the inbound are of of management nimble global rapidly second actions the the started appropriate outlook our with for of changing demand operational we our

of statement balance see area, to signs the relief, are cost we across starting into and move expected more income the the we the some transportation our opportunity and next see as to know fully as fiscal a in the realistically is ahead. impact year. While to significant In sheet this we not what balance in do have quarters total, just YETI in is responding we importantly, market thoughtfully and particularly

year ongoing outlook will these our decisions for of full long-term prudently our reflect and to making Paul Growth uncertainties some the both YETI story. discuss, near, As right the adjusted and mid, commitment we have to

revised of not we this While, back outlook take unknowns controllable what lightly, are decision reflects both believe the a half the and the we XXXX. in

priorities. growth strategic our to Now,

remains as of we mentioned, and consideration is ourselves our continue high what in I is decisions relevance where how job the to our product thoughtful about a This brand great integral driving driving basis to important and buy, brand on hallmark making are daily Consumers differentiate it and to through market. storytelling. As as and ever. brand

approach ice Brooklyn human kept brand most some These to-date. raging building, even truck the we collection story Film Presents included product among incorporate celebrations These you and of interaction, XXth that user generated video our content drinks YETI and products wild, ice you Let a successful three fire experiences Stop new our a surviving of We partners intimate engaged unique boat fire. highlighted and a through cold Ambassador recently retaining to and to a the videos content a content series YETI have Jug We customer support of followers, up This Rambler by Tour. during features YETI conservation me our been showing and the of wrapped most for In give and spanning that philosophy incredible after June, a fans and represent moments. Stop. examples host a here. our opportunity and Tundra and our organizations. submitted enjoyed stories diversity after

One continue from video well fan's XXX,XXX widening demographic community. exploring brand. opportunity collection to on the nearly We're XX with response user channels, opportunities many has TikTok and as we still captured our vast but remains social million received posts connect our through highlighting the are content, for the over important views TikTok likes. as both a and that to Finally, seeing a momentum own recent on an

cooler, coolers, innovation. color been strategy. an launched clear and our Hopper MXX was expanded The proven Hopper wheeled on-the-go wholesale as be The part in highlight seasonal the also quarter Turning such despite for powerful across certain Backpack our of core combination product active of MXX our focus have soft customer. quarter, The skews the on and portability, inventory and first uneven coolers color to the original in have to yeti.com Hard our in and a of the grew proposition innovation, QX quarter and wholesale active colors Haul.

ahead our mobility. with the offer Roadie you'd wheeled we our from and hard Given debuted products to move coolers, YETI channels the will the core the are more across expect portfolio, healthier stocks XX and performance all hard Roadie with in cooler months and vitality other enhanced in our July excited in two introduce XX%, offerings. cooler These corresponding of equipment which XX up broadly in was new particularly

planning quarter, rollout for add underway, school we're last capitalize to this additional back select indicated and begun As thoughtful portfolio. we've fall doors bags better outdoor timing. our distribution on testing to to With

our introduced CAGR in for the in successful week, Beyond And up first color this drinkware we tan XX% period the new these last new efforts which growth second also year XXXX. was with since our and comping colorway Crossroads line a three-year bags Panga XX%, a quarter line, ago on basis. was growth XX%

bottle We line. Rambler and continue constrained travel to mugs our see our good momentum across inventory Straw the with Cap

as on working and families product both several the end. to year products bring holidays we're limited introductions we move release for extend additional product our Finally, towards

a continue Wholesale our heavily reiterate, strength as wholesale our outpaced growth DTC major sell our and optimization wholesale trends inventory our actively position level still improved at off pre-COVID with through by which strategy, year, focus our what To inventory is largest last and supported an position was quarter-to-date. well Looking channel depleted was we addressed to below with efforts. solid as partners. levels, growth

drive physical we intentional in our addition, account. and increasing In consistency the are efforts. battle we the mindshare importance positive believe time, traffic we our advanced the has in to customers to merchandising our work capturing. and intensified, believe sell-through remain progress are which the analytics same for by e-tail continue across encouraged We of digital occasions we At see store rates underscores these purchase and

of work YETI acquisition giving is greater at retention our is into critical efforts, analytics As impact and increasingly challenging we in look us e-commerce, which the our environment. today's clarity

we very We transactions. efforts, and our drive continue as to reengage retention in particularly quality cohorts effective be older

significant this heightened targeted will tools customer drive we our roughly l, in growth acquisition flat deploy While effort and of area most growth, two and new to the relevant be acquisition year-over-year, focus after as an engagement. years resulted strategies of

first remains in for strong inbound later launched in plan year, believe stores and their the stores. continue sales California. working and as our years of will customers. South of including in a this we companies West efforts a merchandising enhancements a and business providing believe more with commerce, YETI store bright retail the in our e-commerce Texas newer demand We would locations, debut ahead, total move also a we of year, of results potential employees place to but to our and bring spot, one enable Lake, store excellent new these we We to With to discovery business place look this opening Carlsbad, forward. Later as saw we QX XX is of of open brand to layouts in legacy and ways platform Coast not the engage our which accelerate are community. the early many our on our positioned in to performance only corporate

digital challenge, same Fulfilled trends marketplace. of With reflecting some a the healthier filled a and and merchant to remained Network, period prior the are a the we significant improve optimistic Finally, the Marketplace and demand broadly facing are by of business positioned seeing year the traffic in significantly the Amazon in inventory position comps half. strategic across we utilization Amazon by second in is this comparisons, Distribution easier online

both the grew economic was playbook our Growth existing business to watching and impact headwinds ago. years expansion we the XX% we look levels opportunities across Nonetheless, quadrupling global closely beyond balanced in the international three and Canada, of and varying our markets across U.S. execute Our the size the on business as opportunities. as Europe, of we from future Australia, and to the two regions. we our are markets non-U.S. global second our remain core in quarter, bullish of our continue

me start with Let Canada.

remains market Our wholesale the in performance solid.

e-commerce opportunity has of the planned, traffic this than a While slower optimistic in been growth Canada. channel about remain we bit

XXXX are in the most slate we across strong full the proven a recent brand in-person wholesale country and Stampede. activations of very including a with of resilient Australia fully closures widely growth a cities. back DTC following various and challenging events to encouraged as attended states here Calgary XX-Day have We and return ramps planned has with

as our We for organic growth make this penetration with and is at a continue strategy national accounts the expansion year look of we the to markets. our progress wholesale coastal brand core existing increasing urban first at with account. This

even most operate. in fast severe remains which opportunity of consumer the headwinds we amidst Europe, some markets in the the in Finally,

focus While recently, Globetrotter, laser-focused channel of delivering opening on Schuster, This six-week with on excited and powerful excellent six-city the was installation brand. to a way particular e-commerce store activities. and lead introduction for to the world More has educate outdoor mountaineering a outdoor installed Munich in by a German street a premium customers of also products front we a enthusiasts. group been the institution in the we U.K. wholesale sports Germany. the the doors We known feature market, our across remain with on Europe, were

show be As coolers at key third-quarter We'll in see to we significant build with full customer assortment Broadly, customers, local soft to launching we our as when drinkware nuances and opportunity of which our their use and lineup take we strategy quarter, a products high-value But servicing the will expect global in out needed, we third international versatility across look preferences. we'll focused on introductions. product address distribution. remain products and brand Europe of and the and cases. rounding a our our care new driving are our the our

thankful Direct-to-Consumer head market store of direct-to-consumer Faiz been from As years. and digital we constant various to through online closely that our UnitedHealthcare and direction the the stoke closing, strategies short-term execute challenges created has and has and incredible and while to support experience taken Officer. I long-term the technology the environment I'm presented the as part demand technology announce two our during Commercial that, invest well-established There at by customers strategic potential Apple's an current Ahmad functions focus environment. growth nothing role joined we've for for will nothing over in development, extensive Delta Faiz evolution, of past operating international, team the leadership that his on to their in steadfast Chief global pleased But YETI global Optum' across support our brand, recent Paul the to in that the organization. will actions in most would execution Airlines financials CEO in for easy In to transformation. digital wholesale turn in the over the and our senior been of outlook. Faiz execution partnering roles and certainly continue retail our sales global role YETI. formerly as With realize now to commitment granted and and that and our drive I'm digital has like director newly brings call for at review with our

Thanks Matt.

start Let call open and followed then by our for your quarter questions. from me reviewing the updated the the by outlook details

plan to XX% in the Second growth just million increased performance comes perform of within the to XX% top shy of million to $XXX growth year XX% year's quarter compared on sales the $XXX.X in prior last was second growth This range. impressive although period. year our to period, XX% full

million channels. Looking year. compared Wholesale sales million increased to to $XXX.X last $XXX.X at XX%

hard wholesale has compared were and $XXX.X year. included million same position same mix $XXX.X period XX% drinkware was year. XX% the to million performance to sales and the strength last compared XX% was year. grew Direct-to-consumer in our satisfy XX% sales particular led in direct-to-consumer driven $XXX.X for the Our bags demand. compared coolers million sales last performance increased inventory corporate to by to to by results better strong equipment Direct-to-consumer in of Overall, eased and coolers category. our coolers By and we equipment, and sales to slightly category, including million, last period, during $XXX.X improved able soft period coolers, channel as

consumer the Our by backpack tote overall offerings supported and across way soft cooler both reception sales our of led channels. business strong new

our the addition, steadily of be we with coolers, the new in improving in rollout progress In the of the Roadies. made throughout further of hard half year which quarter will back supported availability wheeled

strong period. the growth totes comes Drinkware growth XX% top sales our in continued in last This $XXX.X our million compared and on Finally, million Crossroad last year. $XXX.X impressive to to increased business. Camino XX% backpacks to of year's drive bags growth

outlook, quarter, and continues to be cap to for XX.X% differentiator given driver $XXX.X to same came million, or of mix. profit Gross higher remain growth product sales strong customization Overall, in to growth Our to cap and in period the The the period XX.X% offerings, approximately XX% Internationally, sales of Canada, higher the increased and chug Australia of of category in grew in below and straw balanced standouts and million negative product impact sales. was year the International XX.X% costs, total the $XX.X rate of a the $XXX.X the sales category. inbound travel XX-ounce Europe. company. mugs, our year. bottle or compared primarily last across freight, $XX.X for in X% magnitude relatively representing margin compared the prior channel million

Looking at from margin primarily specific basis contraction a the drivers, driven was freight. the year-over-year XXX impact by inbound higher point

an decreased logistics year. XX% SG&A basis from XX.X% driven growth and Variable topline $XXX.X percent basis primarily increased a for primarily of points points period basis Additional as XXX decreased higher offset by or as or all pricing from strong channel Non-variable XX during XX.X% from points and included disciplined to sales, and unfavorable or compared points product in a million increased expenses quarter and and sales mix. higher compared expenses of sales product XXX period year. $XXX.X sales, XXX percent X% Adjusted the reflecting million basis Adjusted XX headwinds of impacts. income to last XX spending. by expenses points XX.X% the for These sales $XX.X distribution were the basis same of operating last the basis points million headwinds costs. costs $XX.X XX.X% sales to of million to of same other or partially

business. expenses, which the higher or losses no our We these income with $XX.X year's the vast per provides bottom-line unrealized The on intercompany discrete the tax retrospectively $X.XX currency to supplemental diluted been These operating clarity and during from rate underlying substantially recast other now and Of gains a foreign better other quarter as our and decreased summary balances. and prior impact results a adjusted tax period. consists change was applied these deck. or per in of of quarterly million to $XX.X Relations gains note, focus in losses share net well the diluted information figures XX% section to compared of prior-year year of are changes website have $X.XX effective Our period. share be Investor income our million the income exclude reflecting found second compared believe Relations to in quarter this XX.X% of XX.X% the majority on Investor with Adjusted a performance cash. in can rate last and benefit

the repurchase of quarter in ongoing same the as cash ended as to primarily lower The compared capital. second sheet, million XXX% to the million $XXX investments the share balance during prior in completion our $XXX.X position million, increased ago to quarter we last well quarter compared period. year $XX with the to Inventory in Turning reflects during $XXX.X million year. working cash the

inventory XX% unit on position closer million shows basis XX% inventory, representing growth $XXX freight, quarter, approximately at is inventory, cost. two XX% capitalized product of on-hand freight XX% is for inventory total prior to grew our is product Excluding XX% the to categories. inbound a main approximately A our in-transit look compared and

not are year's the end fees leases at debt we financing compared offset this last transit by times times yards. was million Total unamortized have deferred million, and improving $XXX.X and while we times, finance quarter. increased seen seeing ports improve, $XXX.X of second port-to-port overall to though the being is at excluding to While transfer rail

the of we principal During $X.X made quarter, million. payments

compared of spending the fiscal increase range Now, factor a between reflects XXXX. XX% sales prudent in we back impacts our XX% turning year now half as XXXX full-year and The constrained to the expectations We to expect to environment. more of for fiscal outlook.

year are the and factors now cost. challenges favorable expect into fourth we now channel range DTC plan to growth impact wholesale. less drinkware, to third this outlook, By our the mix, to be continue of contributing growth modestly equipment incorporating overall XX%. XX% the quarter, outpace quarter, freight to quarter revised near-term product mix our and we balanced margins, growth outpace channel new to driven inbound with in and On greater sales by gross uncertainty expect the DTC full highest outlook, period. coolers of while Several mainly between historically and to the currently for we expect We

is headwind of driving Looking at decline. impact margin the to slightly be for the than less basis XXX the now components, expected overall freight majority overall points the year, year-over-year

driver the of XXXX. be remain large While near-term challenge, softening as positive we ahead a signs to now that ocean a margin gross encouraged ongoing rates we can and look

and now drag, in Our of modest which duties points GSP regarding XXX impacts have to commodity factoring channel. sales are basis recent expected a this approximately of the expectations in be DTC our not totaling stabilization expectation year, includes revised changed product and input some headwind, primarily including costs. costs Other mix

a XXX than contraction approximately year work Finally, offset expect partial cadence the in slightly third the these quarter. we fourth points. we overall see headwinds half pricing of headwinds we followed basis margin be experienced less to quarter our From providing to a by of less standpoint, the during first what

is double-digit overall fourth disciplined to low Our approach spending growth and dollar in both unchanged and we SG&A quarters. still expect the third

We sales expect and higher now reflecting grow faster variable than logistics distribution to costs. expenses

operating continue also expect as we even below year. We to reflecting of opportunities. leverage we the for continue sales the the approximately year-over-year Overall, recent of now and non-variable we expect continue margin expenses expense interest we long-term $X.X rates grow the are our support for in balance expense year. the strategic investments to adjusted our Below million, Together, global make to to market. increases expect operating to range to line, XX.X% between updating in XX%

the XX.X% each tax addition, prior we itself an tax discrete that year's an is expect of in expect adjusted year from adjusted approximately and benefits of now to to compared diluted million, between quarter. in In $X.XX outstanding we increased share XX.X% rate above per fiscal versus rate EPS the impact XXXX. approximately earnings benefited fiscal for effective diluted and $X.XX year XXXX $X.XX Based prior period. rate tax income of $X.XX shares on $XX.X now full approximate This

focused $XX innovation color inventory. want additional for I we expect approximately in these to expenditures on and million provide existing investments also For some capacity of with to on expenditures, capital of products. continue spending expanding new two-thirds roughly

with that in grew and majority goods believe constrained relative basis, of new XX%, of have higher approximately higher been coolers continue extended unit that areas most rate lives. of shelf inventory On a which inventory equipment, the consists this to flexible have and growth and innovation which high-quality our a even see We including vast year. we

comfortable -- makeup of are expect demand of Thus, will actively inventory, our expect reflect in are orders we we updated our starting suppliers the in dollars and and the our with the the and While sequentially year-over-year peak adapting be level period quarter strategies, in in managing with lower inventory face purchase expectations. growth our are providing prudent we challenges we current second to many business, economy. expectations quarter. we the In summary, our on of the focusing

is story an operating achieving While we highlight compared XXXX. that plus This support these it our is we XX% to to think margins. still three-year results includes be, outlook not expansion an and sales to plan where important compelling of a CAGR would clearly impressive

past years gross basis comes performance and total cumulative this despite across and logistic two just of freight points the distribution. XXX SG&A Importantly, from in margin headwinds pressures

will company would operator turn continue the and like the protect smart over pressures, back to now the over to the diligently work to near-term make brand, We the long-term. questions. I call your decisions through set succeed to take up to to the

you. Thank

first session. question Blair. with instructions] ahead. begin now the William Sharon of from [Operator The the question-and-answer line will is Please Zackfia We go

digital of you've any rate? digital sensitivity it that about think to I the there's within Have at YETI to you're or of kind follow-up. don't in of, ask guess, you to seen down The with you as kind lately. that? combat a And Can then been brands talk has Hi, you increased business far? you're or framework. to lot use of the obviously sounds question that challenging lower morning. price with any those if volatilities initiatives good a wanted kind you're for of consumers if but landscape going stabilize success of I guess seen a whether brand-specific, a brand whether anything seeing thus kind And trading I the seeing

touch fronts Sharon. Thanks Great a piece. morning. I and part, of would on say second Good questions. I'll on brand the the couple

performance to We portfolio outlook our kind and resonate. of reaction the continued really And the getting second owner studies, in as we're give continue year. in the that's stores through the XX% the rest to continue to our the our brand growth see we our the of us wholesale go sell-through quarter of studies, in product we're encouragement seeing delivering the in into YETI-owned

it When As business, that digital acquisition really seen we're pleased through have the with customer. look with and our as where that retention accelerated is the ties kind seen we're quality into off five over business what last incredibly the -- the that strength years, in and is the that more side the efforts has shopper pleased we've growth and the the one years of of retention really casual fallen you seen think four, our we've about of two we done we've grown DXC the we've at we the is last and really over the traffic.

has uncertain efforts, And really analytics, your in building marketing times, been the the powerful marketing the interplays efforts, our our by base and enhancements retention So, when you think acquisition strength about conversion. that is way brand tool. with really in driven our interplays a with advanced the performance the of marketing

the the and as a based performance on acquisition of area the the the market think market side, slowdown we in look where breadth new we marketing traffic happening And at around broad seeing the is that, the call, I what's side. we're competition mentioned on in and as the acquisition we've customer seen, world.

omnichannel feel strategy. way about We customer drive brand acquisition with feel stay been to hallmark new So, base, We is through this the to product very positioned. relevance good the we continue where great drive about in is portfolio those the of look we're feel our drives ability resonating. think how be our front about good consumers that continue digital where and shops we about ways to the retention our and our and we've and said on to that's good strategy going very when the And that at side, -- of about the the work time. installed and we'll our

So, went why prudently said, into in strategy. business it's a year we And we continue way and than with to that drive anticipated QX. that's a looked we as strong strong growth coming in, and feel omnichannel the different rest we of high-teens this at

Thank you.

Camilo next BTIG. The sir. ahead is the Lyon question you. from line go of Thank Please with

you. Good thank morning and

the traffic? deceleration shopper thinking using Just efforts that casual a promotional in us secondarily up the half think, wholesale become unique to more propensity how been those your along I the there back DTC little And and update placed? then acquisition bit wholesale you're a with it, time. under you've of may that are sense -- remarks, the some you inventory increased kind the to situation maybe that in DTC tougher triggers seeing promotional side. more to to talked of But on that, some channel marketplace. It's following thinking have Matt, on bit that Is prepared orders competitors your the just drive about the unfolds. Can on what a is in you mentioned in promotionality your about for of clearly, you side, they suit talking the your a about, skittish you on on be for that wholesale follow current little in you're partners quite -- your the you

and a wholesale say morning. past the you the incredible the partnerships of about have we Good have. have as -- talked very close relationship I in couple would things about consistently think Camilo. we Thanks we

perspective our business a what daily, about I to and from good wholesale continue the our positioned, feel a at as we we merchandising are and needs when I they weekly wholesale that the is in. about where hasn't that positioned. in think product through, In fill that year-to-date our what's the channel, and And own they where we performance, stores, changed. understandings and good is inventory those about So, particularly inventory very of mentioned, where have, opportunities feel selling good -- look are

challenging launched consumer, we and we our of consumers. pre-pandemic that times, and we've turn is that in partners to we're continue position brands front job in the bring demand continue in said, flow. in brand, happens QX still to the our can through channel, I partners to past levels that the behind rest the is our have the stoke great innovation channel year distribute found And seen the and that more to and to think we for the we an for As that that below of get present things happens have job wholesale the market, inventory what innovation the what is in stay as from

-- seen and the on think a that's those reality, just pricing environment, we've the think before. promotional I I

the talked and Our changes, in prices with have held this up They made this as price about good in moment. time feel year of no that other changes. price we we changes would work some we even and the regrets any about,

very times we of As we noise. purposeful like rest to what the this for we're year about how environment philosophy it's in or particular thoughtful always use rise we're We're to kind new about of our year, promotion. working think the very product transitions how related the look we has been drive promotional or trying do it. traffic and Traditionally, above to drive where of could

would from different So, be have wouldn't way and anything markedly expect promotion. that historically very we than tactically us very strategically used I the

changes that. in around So, no philosophy

very Thanks much. Good luck.

the Please Sachs. Goldman question is line from ahead. with next Brooke The of go Roach you. Thank

you thank so for taking and morning our question. Good much

embedded given can the innovation currently strength light have thinking inventory the wholesale yeti.com As Amazon and the channel you headwinds balance year the range you versus frame rest the in you are levels brand year? the stores sell-in for corporate that the DTC about us of you've the as of of in you as your Thank and Specifically, well in incremental how facing, help that macro you're new with you. and updated channel, for with that updated guidance? outlook your outcomes DTC the

Good morning Brooke.

as to in we that start what look -- for So, topline. wholesale the the said year be we've based remarks, level and the I'll balanced high prepared on DTC to XX% the XX% on channels will full

in strength sales. corporate We have seen

we So, and to exact out numbers, continue. in sales business while the break as quarter channel, inside in don't expect seen we the of the that strength we second talked DTC corporate about the have

the story compares. of this of some And is

faced lighter So, Amazon business XH. hard where had much compares XH, very in that compare a in

easier the half significant So, had we compares warehouses. the based we the getting expect in performance FPA the and struggles on out it with product of second into

additional the On have retail opened some side, stores. we

sit stores. expect again, So, retail we grow off of XX% to to percentage line. between the we going I'll where past, of But DTC and this to we as look outlook growth grow well. much higher -- started, balanced for And in because the and base, as I we've do growth to expect top said the there XX% a wholesale our updated small a a new the it's again,

maybe question then Matt. Paul. you, Thank And for a

driving to the the and One acquisition. pivots half? think to a drive Thank appears bit relative that competitors little to other back that you're key as more in customer hear YETI initiatives half any the new about your be you of spend, brand back how love marketing Would to into the other about you. in strategy of the thinking some

Good morning I'd of Brooke. Great a things. couple question. say

the we advanced a dynamic. couple that the analytics to and having and have marketing of an creative different that our of the performance with we e-commerce of marketing be funnel, -- created that is our One our sits mid-funnel, can lot way we group is test in-house the incredible of from closely investments, And all with things team benefits down conversion. top pretty

and dynamic away drives at we you it's of in in product then that. And highest brand introduction really when go our I where did some do way more UGC, to and it with traffic talk then our tucked UGC that look and from broad-based -- learning things marketing we all our go and don't so we drives there. we our ambassadors performing spend, to than we performance the And we're new awareness. going that activate things have about and And it's chips -- all that think to about marketing, awareness in

called platforms. us, are a social out sure out there driving that being make continue and utilization and across perform We we number platforms very more proactive number TikTok, They've been we're mentioned to of a well. where consideration. but are that the find a I performing We and think consumers the very those So, other well of of we're a lot go company. of for content-rich different are social channels to

So, we create the engagement, and the we conversion consideration create the awareness, get work the eyeballs, and then funnel. through

So, on couple again. it's really been the in this United world. or the events, whether ground, live the is events think States have market in We're is I year events we've good attending different thing than reaction over that when years of more running out the the attending consumers the seeing around last we

filling -- the so to it the and I resonance, pulse good a funnel think the through the us And team that work top our brand funnel the of conversion. And of acquisition product the resonance. gives will the then

so Thanks much. it pass I'll on.

The the next Brian Thank Please you. is go Harbour line with question ahead. from Stanley. Morgan of

good guys. morning Hey,

on promotional commented You kind environment. the of just

much I competitive think too environment more where specifically and are just pressure have you think or your they're competitive the categories curious of generally. kind lagging you? about whether of product competitors certain behind just them playing they some or promote of the on because I'm you question is seeing of role kind just is are a of, kind more there

I What we in more Good search the environment prepared think are it for after that brands, the competitive a see terms we're that non-branded traffic what terms. a established and competitive terms inclusive non-branded morning. benefits with it in like benefits brands seeing, There's Brian, environment market those on we demand, for what search search particular. more broadly that. which a is terms, see there resonate this in bigger is us I search in that this -- in people of backdrop is out were broad tells the the would in remarks, and mentioned that consumers benefits seeing go say market, for competitiveness a in battle -- ultimately I brands

value I and through that think channels. our we that's digital are the we retain, that of we're that seeing customers we're seeing retention the levels seeing the why

are we The acquiring consumers to consumers. seeing that we it of other that while and really good on planned is good year, side are we're the not on conversion of be is, where value the those really seeing increase acquisition

So, we're considered high-quality, highly getting purchases.

So, I that there's is right seeing that in we're in or broad-based and the cost battle attention. a through broadly acquisition there know I for And market. the think flow I customer market now, a don't think category of

that materially were July into what end Okay, or some even of those quarter their the What of inventory as the improved. in are the kinds of at sell-through great. do levels And at wholesale just sell-through they've your partners, you of think trends? different then at beginning just have trends of your of improved some saw seeing kind you the kind quarter, of versus you

of intra-quarter a couple our would to comment bit I little Yes, but July, It's say history been kind a things. not on maybe of color. of

-- through to the that sell-through. We market haven't July like me, see a in June, seen we the We change performance see quarter. continue didn't or excuse in

we that As we we get holiday moms, type QX. seasons through dads, buying in those grads went our get seasons that

the wonderful national to in independents and planning the toward key the to we're we of the doing inventory relationships the the that some with our as look continues that year, wholesale, improve think of partners our rest I from wholesale as closely tight accounts. very

sure through get I focus it sell to think continues the rate at merchandised positive making then that rest them environment a is market that the product, we regardless the what our or gets of and it does. of

you. Thank

the The you. Thank with Suisse. Gajrawala ahead. Please of line from go question next Kaumil is Credit

teens spread. When to get some margin then maybe perspective details think of bring control the those puts like on Hey down and quite take in gave is. back closer demand looks abating the What guys. issue closer? offset growing but you maybe -- to costs in maybe mid or topline by there, to be or the a it, lines does costs. bottom-line to can a maybe getting delivering from digits. about is quite the is It expected profit is be But declining the Good your you to consumer maybe those together? significant to the Because to two try where morning. decline seem gross customer what's That's might look profit the operating the a -- that control high acquisition group be lot of nicely If mid-single -- a maybe we on takes level, or we costs. things and at could step

Yes.

let I year, the versus main of this guide our So, there. are -- look me two start midpoint pieces there year last with if at

up pressures outlook. is And approximately leverage. that XX.X% first is it's the been second we've the the and from current rate some is then -- the then and tax OpEx gross going second is margin The by about XX.X% year-over-year offset talked and to our

is are of midpoint profit topline at seeing bottom-line, the at look what go to we Then we are the can directly by with XX% and of down. control. big sales those driven I at -- earnings your down price benefit Obviously, the related and the the we buckets. to get saw the stock. the to year tax rate that question stock If two comp that's So, on benefit year-over-year, last

up back On operating the to the so business. of coming gross margin, the

which coming signs, seeing we're On be the go container of gross margin, in prices we a into XXXX. as will certainly benefit down, tailwind

control us. Input commodities we're some down control. know will in don't it. seeing pricing, and come something categories. that we impact key stabilize I if is we some can It So, can

this hopeful bit a us, on year, against us but we we're tailwind. where year a and of shift little and to product a get input that the mix neutralizes gives next bit has of shift benefit there. And go little So, pricing worked the as then into

do and probably year, the signs sheet. rebound that's we So, signs transportation, -- again, channel going has of into way the on year. really the last looking not but control companies is balance is drag. being it then next lower SG&A are seeing moderates not last next do all through freight into P&L are if or probably commodity cost the to we as shift come most, one second being see costs to We shift, outbound in one surcharges product that channel see the the product And hitting fuel and the stabilizing, and

continue. earnings rate then increasing some expect don't of to sales not growing of the moderation. next we tax with dynamic year, and signs And declining, see So, the we

grow as manage SG&A just The We're thing exactly past, we time is what signs good we're we'll effects is that of things Paul the said, we those interesting those. other where seeing of this thoughtfully do to in rest would business, talked costs I happen add topline it. of continue Paul believe side about. when an This thoughtfully talking we've our in costs. times many is in that, the the back We also, the of and

that demand a a these growing company, to the opportunities the of some long-term managing as driving of growth-oriented mid we're and company as to So, growth-oriented keep SG&A. with the business, take we with consumers, while want advantage thoughtfully also

inventory And long be. then feel at the demand inventory got talked have level like you obviously at low expect to have about at quickly, stay? do to on where wholesale which it. managing you'll inventory Okay, on you wholesale, you a you're coming like being the you it How you but bunch over ocean,

Yes.

as going second fourth the started our the launched sure I'm Those in those will MXX, way into the the So we inventory and and are back the is XX. its a the XX either into cooler quarter. as it seen wheeled we MXX into make you've the today of new his wholesale channel XXXX. these Matt we prepared products, in And But what remarks in I launched -- Roadie new quarter. bring was building -- or below wholesale inventory. question -- was we his so saying would wholesale

have we again, overall, like even a inventory we constrained. feel in but both rebuilding own It's my channel half continually through be on dot-com, a and in back build are, We of position been the the position, is, our DTC business business. been we the So, in the where as like we And we'll grower. year go and great wholesale equipment. our coolers back. Bottles in better

you. Thank it. Got

go Thank you. of Robbie from Ohmes The of next Please with the Bank America. line question ahead. is

or the on it and the now guys. Thanks guidance, deterioration? half costs the more to remind further And quarter customer is of assumption for worse third maybe. battle Is is I is Can that the of then on is same assumption kind margin Thanks. gross back just demand peaking to hoping just margin? question. than the was of the to in Or clarify, also you where sort baking fourth some taking or half? the for sort the I why morning thing sort get for remaining now? be back in that based And for or plan digital that you acquisition for me think one Paul your are better the consumer traffic customer? that quarter my it's of do what back half Good something -- for gross is going you

Sure.

to first going and then one, I'll to over the start it turn I'm Matt. hit So, and follow-up, then on your

are to Robbie, is like? the topline. big which call second a big of expecting we So, And us XX% half back but to XX%, look expecting? half gives the Like things back things what does of to the half have trends I a within some quarter, it, are XX% It DTC be the or we similar are say, expecting would what is just in current quarter XX% we range down, of range the for if step fourth we us.

implied were to XX% not XX% again, a half, plus and of plus better. And XX% at XX%. expecting that we was about are of first you on to half, the the compare the in them look XX% We range compare if get second

how we're about of that's So, kind thinking those -- are it.

be So, overall. on in we little And to margin things gross the to prudent get expect on your it's question on decline -- if ourselves It will gross giving quarter. tougher. so margin then fourth similar a bit

will contraction over as we roll have still fourth the in we last just from less year. be So, It impacts quarter. the

freight. last contraction instance, our for inbound So, fourth from most was quarter

rolling over that. we're So,

the margin because contraction in gross So, that of because better I fourth fourth some ease, quarter. compares last contraction had year's gets in quarter

Got get less this. even Matt, challenging That's for And we as helpful. maybe in environments you. this question

little about how new So, the should potential of -- customer more that when Like acquisition challenging. about versus new customer acquisition we costs you talk being a saturation think customer?

seen largest cost same the that way in say before hadn't a Robbie. comment a acquisition things, make the not piece The couple QX. of really we points acutely why dynamic is it's And of new brand, I Let all me customer where to but we're unbranded. our of it's because in seeing data it's really the a related that is thing broad that our to market portion it's

necessarily hearing universe. a it it's So, of a broader outside we're directly thing, it's not market. our YETI And

we extraordinarily I think customer like when think think -- point to concern, -- I'd I increase. things fantastic and about to like that was strong or saw saturation, our point is which I retention, value things

So, ability when fold, we retain get high-quality them is customers into the and our very grow to good. them

the It team of to purchase of portfolio is brand. shows customers and what power during shows I in that our to doing think power keep the the purchase. between engaged of power the the

when lot the in an of lot where environment think ways becomes do I attention. game different how you're to a drive and spend, distractions a of you there's

performance dynamic our the going heavily on and incredibly of acquisition, marketing customers retained. into that we've go of go focus also back marketing after our advanced we team powerful taking and half is As continue care valuable, that our analytics incredibly to year, we're cohorts that of the to while expectation deploying

the I from market. that in still hitting innovation fully think the played -- it we're out hasn't

easier of Now, we're that particularly a going the than XXXX way half of compare year, out. into the is the side an half laid in year back the on front digital

make or we're tugs kind at of, sure front the world newly and consumer So, lot to that we've a distracts particularly got large potential consumer stay we in the the consumer. that at different of of as and probably the spending acquired pulling levers

so much. Thanks it. Got

BNP Thank Siew ahead. you. Please Xian with The next question is go from the line of Paribas.

color you DTC, Thanks. the traffic. could evolved Maybe through about any the the guys. got is consensus some little ones. maybe products to question. quarter? on earlier two supply Maybe Hi trends you chain how then that than One, give on Thanks wholesale kind exiting Maybe months Were for And talk quick of the slowing than of bit in us consider and in help terms the of expected? some there expected. better quarter? a the digital you shifts

Great.

well the me answer question it shifts a major to did the well perform business. as And your quarter. -- through earlier. No It also, I in point, we did to think an Let wholesale perform in start.

We saw also sell-through like what in as we well.

sell-in, retailers' So, moving the doors. our wasn't product just it it out of was

with We late MXX we're brought channel the coming that. on wholesale DTC. So, the launched no We launched and really shifts. major That the happy But into QX in Nordic channel. wholesale in [ph]. into MXX started

major no So, changes.

customer. quarter, of customer Traditionally, a do and say, we obviously, consistent I in the we balance of the the through traffic month-by-month don't choose the pretty the both sort would the to acquisition retained general, strength of saw talk.

the we us. the we a softening called think of platform the the place that's saw that as half I Paul earlier, improvement that thing, remarks one prepared in our reach broad-based as in in we was a for see is alluded the out in said And where to we Amazon to year. And quarter expect Marketplace. back a and

us then of And where you And yeti.com broad-based brand think year with and see growth YETI's accounts that's the of market sales. wholesale a this market experience to and really the going as qualify retail plays our have our I combined seen that could to really think uncertain. with high-teens you're reach drive of in which targeted channels our I combine so that that stores, favor, in very diversity corporate power to the allows be our

Thank guys. Great. helpful. you Very

Sandler. with go Please The you. Keith line the Piper last ahead. Thank is of from question Peter

Egger Matt is for This Peter. Hi. on

you one you QX? expected? changed from that's from And I quick more what us why in of so a than help pressure much more Can was much one understand Just so QX us. guess freight

Yes.

mix. of So, I the big was things product think one

attaches higher and expected, that coolers business bigger than were as the So, equipment a a inbound freight. piece of

trailing. of the was We talked about it. that we in some So, of catch-up of these where There's first quarter a piece that had invoices. the

main compared it to the of kind it in two expected your and our quarter where impacted of that where are to those we have come items come did So, to expectations. in second point

then expectations Is Okay. around updated one. GSP maybe Thanks. last there any And renewal? one just

bills. a that been stripped couple in It bills. it has of nothing was those we know. -- So, It of was out

we've the recess. both one and agreed racing things of they sides of the was So, story, out both few it -- sides August that on. one But bills few stripped were like said the an the feel of same as things to I

after update. today. update unfortunately, the the no So, of here no back hopeful sitting year, We're half in mid-term, maybe but

right. questions. All Thanks. our taking Appreciate

Matt. Thanks

our over for This closing any like concludes you. session. would question-and-answer Thank I conference turn Reintjes to remarks. the Matt to just back

you look our speaking We to with with results. QX a wonderful Have us this everyone, for Thanks, morning. forward joining day.

The now you. conference has you today's presentation. concluded. Thank Thank for attending

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