YETI reports Q4 loss as product recall hits hard
A product recall costing $128.9 million in write-offs resulted in a fourth quarter loss for US cooler maker Yeti.
Sales for the period would have shown a 10% increase, but were reduced to 1% by the recall of a number of magnet-lined products.
As a consequence, the company – a regular at the ICAST trade show – also issued a profit and sales warning for 2023, saying that growth would be 3% to 5%.
YETI made the global recall when it found out that the magnetic closures on the Hopper M20 Soft Backpack Cooler, the Hopper M30 Soft Cooler and the SideKick Dry Gear Case could fail and release magnets that could injure or kill if ingested, although it was not aware of any injuries.
“On top of a remarkable 29% increase in 2021, YETI delivered strong sales growth in 2022, up 13% and 16% adjusted. Our results reflect the impact of the recalls during the fourth quarter. We believe these recalls are the right decision for our customers and our brand and are consistent with our commitment to durability, performance, quality and design,” said Matt Reintjes, President and Chief Executive Officer.
“Excluding the impact of the recalls, our fourth quarter results were in line with our expectations, driven by the strength of our direct-to-consumer channel and the momentum of our international business.
“On an adjusted basis, profitability remained strong in 2022 despite the significant impact of lingering supply chain costs. Importantly, gross margin headwinds began easing during the fourth quarter as we expected, with year-over-year levels expected to turn positive and gain momentum as we move into the upcoming quarters.”