Yeti ( NYSE: YETI ) stock rose sharply in Thursday’s premarket trading after reporting a beat on earnings despite inflationary and supply chain pressures.
For the third quarter, the cooler manufacturer notched a beat on top and bottom lines , driven by a 19.6% increase in revenue from the prior year. Gross profit increased 7% to $222.4M despite a 580 basis point decrease in gross margin due to higher freight, product costs, and the unfavorable impact of foreign currency exchange rates.
“We are very pleased with our stronger than expected 20% growth in the third quarter, which highlights the strength and diversity of our omni-channel distribution strategy,” CEO Matt Reintjes said. “This performance included balanced sell-in and sell-through at wholesale, solid customer retention and new customer acquisition growth in our direct channel, and a strong contribution from our international expansion.”
He added that while margins remained squeezed due to both inflation and supply chain disruptions, he foresees these pressures easing into the fourth quarter and even further into 2023. As such, he remained optimistic in forecasting the quarters ahead.
“As we enter the holiday season, we believe we are well positioned to win with consumers by leveraging our strong brand and innovative product portfolio,” Reintjes said. “Our approach to winning the fourth quarter gifting occasions remains focused on what we do best—driving the desire for both the brand and product.”
Management expects sales to increase approximately 16% for the full year. However, the adjusted net income per diluted share is expected to drop 9% from the prior year to approximately $2.36, slightly short of the consensus of $2.37. Capital expenditure expectations for the full year were trimmed from $60M to $50M.
Elsewhere, inventory increased 65% to $439.4M from the prior year. However, on a sequential basis, total inventory declined by about $50M, representing a 10% decline.
Shares of the Texas-based company rose 3.82% in premarket trading on light volume.
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Yeti notches earnings beat, highlights holiday sales opportunity