YETI Q1 Earnings Call: Supply Chain Shifts and Tariff Pressures Lead to Lower Profit Outlook

YETI Cover Image — YETI Q1 Earnings Call: Supply Chain Shifts and Tariff Pressures Lead to Lower Profit Outlook

Petr Huřťák

Fri, May 9, 2025, 12:12 PM 6 min read

Revenue: $351.1 million vs analyst estimates of $346.9 million (2.9% year-on-year growth, 1.2% beat)
Adjusted EPS: $0.31 vs analyst estimates of $0.27 (14.6% beat)
Adjusted EBITDA: $48.33 million vs analyst estimates of $42 million (13.8% margin, 15.1% beat)
Management lowered its full-year Adjusted EPS guidance to $1.99 at the midpoint, a 32% decrease
Operating Margin: 6.2%, down from 7.6% in the same quarter last year
Free Cash Flow was -$89.2 million compared to -$114.3 million in the same quarter last year
Locations: 23 at quarter end, up from 20 in the same quarter last year
Market Capitalization: $2.45 billion

StockStory’s Take

YETI’s first quarter results were shaped by strong growth in its Coolers & Equipment segment and continued momentum in international markets, as management emphasized on the earnings call. CEO Matt Reintjes credited new product launches, particularly in hard coolers and bags, as well as expanding direct-to-consumer and wholesale channels for driving the quarter’s performance. However, the company also noted that drinkware sales in the U.S. faced headwinds due to a more challenging market and the impact of supply chain diversification efforts, which limited the pace of new product introductions.

Looking ahead, management highlighted significant tariff-related challenges and ongoing supply chain transitions as the primary factors behind its reduced profit outlook for the year. CFO Mike McMullen explained that the accelerated move away from China manufacturing is creating short-term supply constraints and higher costs, while also lowering full-year adjusted EPS guidance. Reintjes acknowledged the uncertain consumer environment and stated, "2025 is a transition year," with a focus on mitigating near-term disruptions to set up for stronger performance in 2026.

Key Insights from Management’s Remarks

YETI’s leadership attributed Q1 performance to innovation in coolers and bags, international expansion, and ongoing supply chain changes. The company’s forward-looking commentary centered on mitigating tariff impacts and accelerating supply chain diversification.

Coolers & Equipment Momentum: The Coolers & Equipment category led growth, with notable success from the Roadie 15 hard cooler and the launch of the Ranchero backpack. This segment benefited from sustained product innovation, which management believes will drive future expansion.
International Expansion: International markets delivered double-digit growth, especially in Europe and Australia. The company began building a local team in Japan and expects this market to serve as a strategic entry point for further Asian expansion.
Drinkware Category Reset: U.S. drinkware sales declined as the company navigated both a saturated product segment and disruptions from supply chain shifts. Management expects stabilization by the second half of the year, supported by upcoming product launches and increased diversification within the category.
Supply Chain Diversification: Accelerated efforts to shift drinkware manufacturing out of China are underway, with management projecting that by year-end, less than 5% of U.S. cost of goods sold will originate from China. While this transition is expected to reduce tariff exposure in 2026, it is creating temporary inventory constraints and product launch delays in 2025.
Operational Discipline: The company is prioritizing cost management, inventory reduction, and targeted capital expenditures. Initiatives include pausing some non-critical projects while increasing investment in supply chain transformation and product development capabilities, such as a new testing center in Asia and expanded design resources in the U.S.

Drivers of Future Performance

Management’s outlook for 2025 is dominated by efforts to manage tariff exposure, supply chain disruptions, and changing consumer demand, all of which are expected to influence growth rates and margins throughout the year.

Tariff Impact and Mitigation: Tariffs on China-sourced goods are projected to reduce gross margins by roughly 450 basis points, even after pricing actions and supplier cost-sharing. Management’s mitigation strategy includes accelerating supply chain moves and cautious inventory buys.
Innovation Pipeline and Launch Cadence: Over 30 new products are planned for release in 2025, though some launches will be delayed or limited in scope due to supply disruptions. The company expects higher innovation cadence to return in 2026 as supply chain transitions are completed.
Consumer and Channel Trends: Cautious consumer sentiment and wholesale inventory management are contributing to a more unpredictable demand environment. Management is monitoring sell-through and adapting allocation strategies between direct-to-consumer and wholesale channels accordingly.

Catalysts in Upcoming Quarters

Looking forward, the StockStory team will be monitoring (1) the pace and effectiveness of YETI’s supply chain diversification away from China, (2) the launch and sell-through of new products, particularly in drinkware and bags, and (3) the trajectory of international sales as the company enters new markets like Japan. The impact of tariffs on margins and any signs of consumer demand recovery in the U.S. will also be key indicators of future performance.

YETI currently trades at a forward P/E ratio of 11×. At this valuation, is it a buy or sell post earnings? See for yourself in our free research report.

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