Chubbies made waves as a direct-to-consumer menswear brand, but it’s making headway in wholesale as it broadens relationships with large retail accounts.
Parent company Solo Brands Inc. ended the first quarter with sales growth, buoyed by a wholesale revenue jump of 52.3% to $33.5 million. That more than offset the 9.1% decline in the direct-to-consumer channel, which generated revenue of $54.8 million.
An expanded presence on retail floors drove the run up for Solo Brands, which also owns Solo Stove, Oru Kayak, and Isle.
Solo Brands CEO John Merris called out Chubbies’ performance at Dick’s Sporting Goods as a notable standout in the quarter, calling the relationship a “bright spot.”
“If you’ve walked through a Dick’s Sporting Goods store in the last couple of months, you’ve probably seen the men’s featured swim wall, which is essentially a big, beautiful Chubbies display,” Merris told analysts last week during the company’s quarterly earnings call. “That has been very successful. The feedback from Dick’s has been positive, and we’re excited and encouraged to see the lean-in happening there.”
Merris said the company overall saw faster-than-expected replenishment activity in the wholesale channel for its brands in the quarter, and part of that was attributed to the Chubbies-Dick’s partnership.
Merris also noted retailers, in the way of markdown activity, have been in line with 2022 levels.
“I think what’s changed for us on the retail front is that we’re more calculated and more planned in advance with our retailers than we’ve been in the past,” he added.
That’s meant, more specifically, greater communication with retailers on promotions that may be occurring on Solo Brands’ online shops to ensure consistency across wholesale and DTC.
DTC Impact
The CEO said it’s too early to call out specifics of the impact wholesale growth is having on DTC. However, it appears to have some effect.
“I’ll say anecdotally, what we are seeing and hearing, since we’ve leaned in and started seeing more momentum in wholesale … if you just go to social listening and what we’re seeing commentary-wise by customers online, customers are actively talking about seeing our products in our retail partner stores at a much higher rate than they were previously,” Merris said.
Merris said, over time, more insights will likely lead to a better understanding of how a retail partner, such as Dick’s, can impact online sales at the regional level or even how a brand like Chubbies approaches customer acquisition.
“We’re encouraged,” Merris said.
Financial Recap
Solo Brands said it expects companywide revenue this year to be somewhere in the midpoint of the $520 million to $540 million range.
The company’s total net sales in the recently ended March quarter totaled $88.2 million, up 7.3% from a year ago. Solo doesn’t break down the individual performance of its portfolio brands.
Solo Brands reported adjusted net income of $10.3 million, down 6.5% from the year-ago period.
“We are operating in an uncertain macro environment where consumers are being selective in their purchases,” Merris said. “However, our direct connection to customers, combined with strong execution by our team in the three areas mentioned before – product innovation, channel expansion, and international growth – create a wide, competitive moat around our business and, most importantly, create a foundation for years to come.”
Kari Hamanaka can be reached at kari@shop-eat-surf-outdoor.com.
