Traeger CEO on supply chain challenges: ‘We’re not calling victory yet’
Traeger CEO Jeremy Andrus joins Yahoo Finance Live to discuss company earnings, inflation, supply chain concerns, and the outlook for retail inventory.
Video Transcript
BRIAN CHEUNG: Grill maker Traeger hoping to smoke out some profits-- get it, smoke out and profits-- after months of getting grilled on the street. Shares of the grill maker are rising in a relief rally after the company reported earnings that were better than expected. But how will the company deal with inflation and supply chain headwinds as consumers tighten their belts? For more, let's bring in Jeremy Andrus, Traeger CEO, as well as Brian Sozzi here with Yahoo Finance.
It's great to have you on the program. I wanted to just kind of kick off, Jeremy, with just an overview of what you reported for the quarter. What were you seeing in terms of demand for your products?
JEREMY ANDRUS: Look, I would say, first of all, we had a good quarter. We're coming out of a pandemic and so demand signals have been volatile. There was, of course, this massive tailwind of demand and we're just coming out of that and understanding what does normal look like. But I would say, first of all, props to my team who delivered an incredible quarter in a challenging environment, challenging for a lot of reasons.
But we sort of step back and say a Traeger owner absolutely loves his or her Traeger. They love to cook on it, they love to share. We've been taking share for many years. If you look at the growth rate in the quarter and you sort of look at it over a normalized period like 2019, growing at a 32% CAGR over the '19 quarter, which was which was a much more normal year, I think the net of it is that our position in the market continues to drive growth, continues to take share, and it's because of this passionate community.
So you have to step back and recognize it's a volatile moment, but over time, great brands who service their consumers well and create an experience that matters to them, they win. And that's what we're doing.
BRIAN SOZZI: Jeremy, is there any sign that the supply chain challenges you were dealing with when we last talked a couple of months ago, is that lessening at z/
JEREMY ANDRUS: You know what, I would say we are optimistic that they will. We saw a little bit of softening in container rates in the first quarter, but it was short lived due to lockdowns in China as ports just started feeling more pressure, the Port of Shanghai, where we take a fair bit of product out of. And so I would say the positive is that the environment has stabilized, and that's a starting point. And we are very optimistic that as we get towards the end this year, and particularly coming into next year, some of these forces that have turned supply chains upside down, they'll begin to rightsize themselves. We're certainly not calling victory yet, but we see some early signs that in the not too distant future things will improve.
BRIAN SOZZI: Are the major retailers, and I know you've made a lot of good inroads with I believe Home Depot, but the major retailers, have they positioned from an inventory perspective as if this grilling season will be a little recessionary?
JEREMY ANDRUS: We have a very sophisticated planning process with our retailers. Every week with our largest customers we're looking at sell through, we're looking at inventory and channel, thinking about inventory that we're building. And I would say that our retailers have leaned into inventory deliberately, given the environment and the fact that getting inventory on time predictably on time is just not the world that we live in. And so we feel like our retailers are in the right position heading into this season and we talk to them every week and we course correct as we see demand signals. But I would say we think they're in a good spot and we think we're in a good spot. Heavier than we might have been in 2019 but certainly not excessively heavy. In a position where we can lean into it coming in the season and then we can begin to pull inventory down as we come out of this season. But particularly as we have more predictability in the supply chain environment it allows us to do that.
The other thing that I would note, and particularly with Traeger, is that we don't have inventory obsolescence. The product lifecycle of what we have in market is such that if we carry a little bit of inventory across quarters or into a new year, that's probably the more intelligent way to run the business now than to be short inventory and not know when it's coming. So we like our inventory position and I would say in the conversations with our retail partners we think they're in a good spot as well.
BRIAN CHEUNG: All right, well Jeremy Andrus Traeger CEO, as well as Brian Sozzi with Yahoo Finance, thanks so much for that conversation. Hope to talk to you again.
