Yeti shares fall as falling margins outweigh big profits

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Yeti said inbound freight costs have increased.

The time of dreams


Yeti Holdings

is the latest example of supply chain disruptions and higher costs squeezing corporate profit margins, and Wall Street was not happy.

Yeti stocks (ticker: YETI) rose in pre-market trading, only to drop sharply at the end of the day. The maker of high-end coolers and other outdoor gear reported adjusted net income of about $ 57.1 million, or 64 cents per share, for the third quarter, as net sales jumped by 23% to $ 362.6 million. Wall Street consensus estimates predicted adjusted earnings of 60 cents per share and net sales of $ 357.6 million, according to FactSet.

The company also raised its outlook for adjusted earnings per share for 2021 to between $ 2.51 and $ 2.53, from a previous range that had peaked at $ 2.46. Analysts previously expected adjusted annual earnings of $ 2.48 per share.

Despite this, Yeti stock fell 6.3% to $ 96.67 in Thursday’s trading, leaving shares up about 41% year-to-date.

The company said a 2 percentage point drop in gross margin was mainly due to higher inbound freight rates and what it saw as an unfavorable blow to the non-renewal of the Global System of Preferences program. on import duties. This was partially offset by improvements in product costs, among other factors.

“While we are not immune to the confluence of supply chain disruptions and cost pressures that are pervasive in the marketplace, our team’s continued execution has supported our ability to grow again. our earnings outlook for the year, ”CEO Matt Reintjes said in the earnings release.

Berenberg Capital Markets analysts Rudy Yang and Sam England wrote in a note Thursday that demand remained robust for products such as thermoses, coolers and other equipment, which helped boost wholesale and direct-to-consumer sales. .

“While many outdoor recreation companies have temporarily seen demand increase due to the pandemic, we believe the strength of Yeti’s demand will continue to grow,” analysts wrote. “We attribute this primarily to the continued growth of Yeti’s international sales, ongoing new product launches and effective marketing efforts, which have led to a double-digit increase in sales per customer this quarter. “

Having said that, they don’t see much room for the stock to rise. They rate Yeti at Hold, with a target of $ 103 for the prize.

Write to Connor Smith at [email protected]


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