The American Yeti continued to grow strongly last year. In the fourth quarter, the American supplier of coolers, drinkware and other outdoor equipment recorded a 23 percent gain in revenues to $297.6 million, driven by strong growth in direct-to-consumer (DTC) sales, which increased by 35 percent to $149.0 million. Wholesale revenues grew by 14 percent from the year-ago quarter. Sales in both channels were driven by the Coolers & Equipment and Drinkware segments. The gross margin rose by 1.5 percentage points to 54.5 percent, lifted by cost improvements, particularly in the drinkware category, and a favorable shift in channel mix led by an increase in DTC sales.
The company’s net income fell by 81 percent to $4.7 million, but it went up by 31 percent to $42.1 million excluding extraordinary items. Those items included a surge in expenses related to a $40.7 million stock-based compensation to shareholders. A few days ago, one of its major shareholders, Cortec, which represents the Seiders family, pledged to sell between 17 and 20 percent of Yeti’s capital to BofA security, with none of the proceeds flowing back into the company.
Drinkware sales rose up by 34 percent to $192.0 million in the latest quarter, driven by the continued expansion of product offerings - including the introduction of new colors and sizes - and customization options. Sales of Coolers & Equipment improved by 12 percent to $102.3 million, with soft coolers, outdoor living, bags and cargo doing well.
The management said the financial performance achieved in 2019 was a result of progress with its four strategic growth drivers, namely expanding the customer base, introducing new products, omnichannel growth and international expansion. In particular, it highlighted a marketing program during the fourth quarter that included the distribution of a promotional catalogue to 1.5 million U.S. homes. It also proactively communicated on its customization capabilities, debuting two product-led ad campaigns on TV and digital channels that aired through the quarter.
International sales represented 5 percent of all revenues during the quarter and 4 percent for the full year, compared with only 2 percent in 2018. Canada had the largest share of the segment, with the company focusing on DTC in the country through the yeti.ca website, along with a holiday ad campaign. It plans to expand wholesale and e-commerce in Japan.
For the full year, sales jumped by 17 percent to $913.7 million, including a 34 percent gain in DTC to $386.1 million. Thanks to the group’s efforts to develop an omnichannel strategy, DTC now accounts for 42 percent of total sales, up from 10 percent just three years ago.
Wholesale revenues climbed by 7 percent to $527.6 million. Drinkware sales increased by 24 percent to $526.2 million, while sales in the Coolers & Equipment division gained 11 percent to $368.9 million. The gross margin improved by 2.8 percentage points to 52.0 percent. Net income was down by 13 percent to $50.4 million.
Yeti’s guidance for 2020 calls for a slightly lower increase of 13 to 15 percent in its revenues.