The Motley Fool – Keeping it Cool with YETI

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What is YETI?

  • After a cancelled IPO in 2016, it officially IPO’d on October 26, 2018 at $18, lower than the $19-20 it was seeking
  • YETI was founded in 2006 in Austin, Texas
  • Their only physical location is in Austin, Texas
  • Their sales are made up through 70% wholesale and 30% direct channel
  • Can be found at 4800 retailers across the US, mostly at Dicks Sporting Goods and REI type stores
  • The South and Southeast have been their primary markets with a heavy focus on sales to people who hunt and fish
  • In 2015, 69% of sales were to hunters, but that shrunk to 38% in 2017
  • In 2015, women accounted for 9% of sales and that increased to 39%  in 2017
  • Known as a premium brand which focuses on hard and soft cooler sales
  • They are expanding the brand into drinkware, outerwear, and even dog bowls

The Numbers

  • Coolers represent 45% of revenue & drinkware represents 52%
  • Drinkware led sales in 2017 & increased 49% in the first half of 2018
  • Net profitability is roughly 5%
  • Their products range from $20 to $1300
  • Revenue was down 22% in 2017
  • Revenue increased from $60 Million in 2013, to $640 Million in 2017 for 60% CAGR
  • $15.5 Million in net income in 2017

Big Picture

  • The co-founders own 19% of the company, while the private equity firm Cortec owns 52%
  • Cortec’s 2012 investment of $67 Million, was worth $1 Billion at the time of the IPO
  • They’re ramping up the marketing
    • They spent $156 million from 2013-2017 with $50 Million of that coming in 2017
  • Concerns YETI could end up like other single focused companies ( GoPro, Fitbit, Blueapron) once the ‘fad’ is over and more competition enters the space
  • The United States is their primary market, as their expansion to international markets is only in the brand recognition stage
  • YETI won a lawsuit against competitors who were making a similar product. The ruling called for immediate liquidation of their goods, which led to a firesale of coolers, which can be blamed for the decreased revenue in 2017.
  • Paul Carbone become CFO of YETI after leaving his role as CFO at Dunkin Donuts