Yeti reduced its sales outlook because of the anticipated impact of tariffs and weaker consumer demand as the company works to reduce its exposure to China and manage constrained inventory.
Yeti said it will produce more than 90% of its drinkware outside of China by the end of 2025. The company is broadening its footprint in Southeast Asia and is investigating manufacturing opportunities around the globe. It’s a process that has been ongoing since 2018, said Yeti CFO Michael McMullen on the company’s Thursday morning earnings call.
But recent tariff increases to as high as 145% on products from China will put a strain on the company’s inventory this year, primarily in drinkware, but also in the coolers and equipment category.
“We have also had made the decision that there are certain products that it just didn’t make sense to scale the supply chain in China, and so therefore we pushed those launches out to 2026,” McMullen said. “There are others where it makes sense that we’re going to launch outside of the U.S. first.”
Yeti will launch 30 new products in 2025 compared to 24 in 2024, but some will have limited supply and others will launch exclusively outside of the U.S. Those launches will include insulated sports jugs, additional backpack releases, thermal lunch bags and boxes, Yeti’s first beach chair, and an extension in the brand’s Go Box protective case family.
Shifting Products to Other Markets Will Hurt Revenue
Since nearly 80% of Yeti’s sales are generated in the U.S., those adjustments will have a meaningful impact this year.
For fiscal 2025, which is a 53-week period rather than 2024’s 52-week period, Yeti anticipates adjusted sales to increase between 1% and 4%, rather than its previous outlook of between 5% and 7%. That’s because of inventory supply disruptions as the company works to diversify from reliance on China.
Adjusted operating income is expected to be 12% of adjusted sales, down from its prior outlook of 16.9%. Free cash flow will be between $100 million and $125 million, down from $200 million, because of supply chain disruptions and higher tariff costs.
Inventory constraints will be managed in an effort to support both DTC and wholesale, said CEO Matt Reintjes.
“Some things we’re going to launch outside of the U.S. because we didn’t have enough to service broadly our omni-channel in the U.S.,” Reintjes said. “Some things will be supply constrained, and so we won’t be able to fill the full omni-channel, and some things will get pushed while we build more supply to be able to more fully support the demand.”
Yeti’s First Quarter Results
In the first quarter ended March 29, both sales and adjusted sales increased 3% to $351.1 million.
- U.S. sales decreased 2% to $271.3 million and international sales increased 22% to $79.9 million.
- DTC sales increased 4% to $196.2 million, largely driven by growth in the coolers and equipment category.
- Wholesale increased 1% to $154.9 million, again largely due to growth in coolers and equipment.
- Drinkware sales decreased 4% to $205.6 million. Drinkware sales grew internationally but declined in the U.S. The category was up against a tough comparison – drinkware sales increased by 13% in the same quarter a year ago. This quarter’s drinkware sales were also impacted by prioritizing supply chain diversification over innovation.
- Coolers and equipment sales increased 17% to $140.2 million due to strong demand for hard coolers and bags and growth in both the U.S. and internationally.
Net income increased 5% to $16.6 million, or 4.7% of sales. Adjusted net income decreased 12% to $25.8 million.
Kate Robertson can be reached at kate@shop-eat-surf-outdoor.com.
