Dive Brief:
- Yeti's inventory levels were down 9% YoY in its most recent quarter as it struggled to keep up with high demand for its products. But the company pointed to its 31% inventory growth, quarter over quarter, to underscore improvements to stock levels, President and CEO Matt Reintjes said on an earnings call last week.
- Yeti has specifically struggled with inventory in its new luggage line, where it has consistently gone "in- and out-of-stock," Reintjes said. "I think the big thing for us is this is a new product family that we ramped and built through the COVID era, 100% remotely, ramping up a new supply chain in a new factory," he said of the luggage launch.
- Yeti expects its inventory position to improve on a YoY basis as early as the current quarter, CFO Paul Carbone said, citing the company's own forecasts.
Dive Insight:
Yeti is not alone in navigating an environment in which keeping up with demand is no easy task.
Some companies, like Clorox, have managed to grow their inventories through efforts to shift resources and stand up new production lines. But many have struggled with inventory at a time when high demand meets a supply chain having a hard time keeping up.
Reintjes said the company sees "pressures" on supply chains, logistics and materials. Yeti spoke earlier this year about testing new port locations in an attempt to avoid congestion at West Coast locations. But supply chains are also dealing with a shortage of trucking capacity, competition for labor and generally elevated demand that current inventory levels can't support.
As Yeti works to rebuild its inventories, it expects to face elevated freight costs that could be around for the rest of the year.
"The higher freight assumption is largely consistent with what we are seeing in the broader market as COVID continues to impact global logistics," Carbone said. "And we now expect these elevated shipping rates to persist for the balance of the year."
Reintjes noted that the company moved its supplier base for bags out of China and into "other markets in Southeast Asia" and said it is looking to grow in the region.
"There's a ready supply base for expansion," he said.
