Yeti outlook holds up against increased competition: Analyst

Shares of Yeti Holdings (YETI) are sinking after missing Wall Street fourth-quarter expectations on both the top line and bottom line. The company posted $519.79 million in revenue, against an expected $536.5 million. In addition, the company issued a conservative 2024 outlook, with President and CEO Matt Reintjes saying in the report: "Given the uncertainties of the current environment, our outlook for 2024 balances a cautious approach with the ongoing opportunities that we see to drive growth through brand, product, and geographic expansion."

Anna Glaessgen, B. Riley Securities Senior Analyst – Consumer Equity Research, joins Yahoo Finance to discuss the tumbler maker's performance, outlook, and competition from Stanley.

Speaking on performance in the quarter in regards to competition Glaessgen says:

"Actually in the quarter, we wrote about Stanley. Stanley has obviously been a really popular topic, especially given the growth that they've seen in the past couple of years. But, Yeti's drinkware actually came in ahead of expectations, it grew 12% year-over-year... So what we're seeing isn't necessarily an impact from Stanley directly, or a problem in drinkware, the company actually noted that their cooler business, coolers and equipment, saw an impact from a more cautious consumer, on high ticket items... That's really what drove the short fall versus the expectations on the top line."

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Editor's note: This article was written by Nicholas Jacobino

Video Transcript

RACHELLE AKUFFO: Yeti shares sinking after missing expectations on the top and bottom line in the fourth quarter. The cooler and drinkware maker reporting revenue of $519.8 million and adjusted earnings per share of $0.90. The company also issuing a conservative 2024 outlook. Now, this comes as hype has grown around Stanley, a competitor in the travel tumbler market that has seen sales jump almost 300% year over year, according to our next guest.

Joining us now, this is Anna Glaessgen, B. Riley Securities Senior Analyst for Consumer Equity Research. Thank you for joining us this morning here. So in terms of what the markets are reacting to here-- this outlook, it was a very cautious outlook that we saw here. Do you think the markets are reacting appropriately to this?

ANNA GLAESSGEN: Yeti has been a really high-quality name for a long time. Its historical growth algorithm has been in the 10% to 15%. I think Yeti was smart in setting expectations conservatively, coming out with 7% to 9% growth. But when you have that sort of reset of expectations, it's natural that the markets will see a correction.

BRAD SMITH: And so how much of this can we correlate to one of their competitors, Stanley, which has seen viral fanfare, which is perhaps seen a wave of new consumers make its way towards their products, versus a Yeti product?

ANNA GLAESSGEN: Sure. Actually, mean in the quarter, we wrote about Stanley. Stanley's obviously been a really popular topic, especially given the growth that they've seen over the past few years.

But Yeti's drinkware actually came in ahead of expectations. It grew 12% year over year, versus expectations, or our model for around 10% growth. So what we're seeing isn't necessarily an impact from Stanley directly or a problem in drinkware, the company actually noted that their cooler business coolers and equipment saw an impact from a more cautious consumer on high-ticket items.

So when you think about the price points versus drinkware in that $30 to $50 range, versus coolers, which can be upwards of $300, you're seeing a bit more of a cautious consumer. And so that's really what drove the shortfall, versus expectations on the top line.

RACHELLE AKUFFO: And, Anna, I have to ask you about demographics here, because when you think of where you tend to see Yeti products show up, things like the coolers, very different from my fifth-grader and her entire grade all wanting Stanley cups. How different are the demographics that these two companies are really targeting?

ANNA GLAESSGEN: When the Stanley craze first started coming out, I think it was dismissed as, well, this is really an incremental consumer. Yeti is really passionate, or the Yeti brand really focuses around that passionate outdoorsman, the fisherman, the hunter. And so the typical Stanley customer that we're seeing is very different from that. And so overall, we think they are reaching a customer that isn't necessarily in Yeti's core wheelhouse. But when, like you mentioned, have nearly 300% growth in a product that is within your broader category, clearly, there is some impact there.

BRAD SMITH: I just want to go back to something that you mentioned about the coolers here. How much of that do you think is still lingering after effect from the recalls that had taken place in recent years?

ANNA GLAESSGEN: Well, as I talked about on the call, they started their soft cooler relaunch with a more limited color assortment. And they felt that, given that the products were out of the market through 2023, that the brand awareness is still growing and recapturing where it was, prior to the recall. So I think there was some impact. But overall, I think it seems to be a more cautious consumer that's really hitting that 300-plus price point.