YETI Q4 2024 Earnings Call Transcript

Quartr
Provided by Quartr
February 13, 2025
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Operator

Good morning, ladies and gentlemen, and welcome to the YETI Holdings Fourth Quarter twenty twenty four Earnings Conference Call. At this time, all lines are in a listen only mode. Following the presentation, we will conduct a question and answer session. This call is being recorded on Thursday, 02/13/2025. I would now like to turn the conference over to Maria Licouris, Investor Relations for YETI.

Operator

Please go ahead.

Maria Lycouris
Managing Director at Solebury Strategic Communications

Good morning, and thank you for joining us to discuss YETI Holdings' fourth quarter and fiscal twenty twenty four results. Leading the call today will be Matt Ranches, President and CEO and Mike McMullen, CFO. Following our prepared remarks, we'll open the call for your questions. Before we begin, we'd like to remind you that some of the statements that we make today on this call may be considered forward looking, and such forward looking statements are subject to various risks and uncertainties that could cause our actual results to differ materially from these statements. For more information, please refer to the risk factors detailed in our most recently filed Form 10 K.

Maria Lycouris
Managing Director at Solebury Strategic Communications

We undertake no obligation to revise or update any forward looking statements made today as a result of the new information, future events or otherwise, except as required by law. Unless otherwise stated, our financial measures discussed on this call will be on a non GAAP basis. We use non GAAP measures as we believe they more accurately represent the true operational performance and underlying results of our business. Reconciliations of these non GAAP measures to their most directly comparable GAAP measures are included in the press release or in the presentation posted this morning to the Investor Relations section of our website at yeti.com. I'd now like to turn the call over to Matt.

Matthew Reintjes
Matthew Reintjes
President, CEO and Director at YETI

Thanks, Maria, and good morning. Twenty twenty four was an excellent year for YETI with strong top and bottom line growth fueled by our brand strength, expanding product portfolio and growing global presence. Over the past twelve months, our team has clearly executed against our strategic priorities. Starting with brand. YETI consumer and owner studies continue to show strong passion for the brand and support our product expansion strategy.

Matthew Reintjes
Matthew Reintjes
President, CEO and Director at YETI

In 2024, we participated in over 200 consumer events around the world, ended the year with roughly 200 global ambassadors and secured meaningful partnerships growing our addressable market across key consumer groups. In innovation, we delivered impactful additions in drinkware, food, coolers and bags, plus expanded our color options. Within our omni channel, we grew our DTC in wholesale across geographies, continuing to find meaningful ways to intersect with consumers where they shop. And finally, internationally, YETI's global brand resonance is unlocking tremendous white space in international markets. Additionally, YETI delivered excellent adjusted gross margin and adjusted operating margin expansion throughout the year despite a choppy macro and competitive domestic environment.

Matthew Reintjes
Matthew Reintjes
President, CEO and Director at YETI

We ended the year with a cash position of approximately $360,000,000 building on our strong balance sheet. Our momentum continued in the fourth quarter even as we saw signs of discerning consumer buying, more promotional activity and heightened competition, particularly in The U. S. Market. Innovation and product diversification continued to drive demand across YETI in the quarter with particular strength in the coolers and equipment category, specifically in hard coolers and bags and with strong growth internationally.

Matthew Reintjes
Matthew Reintjes
President, CEO and Director at YETI

We delivered over $200,000,000 in free cash flow for the second year in a row and we expect another strong year in 2025. This robust cash generation gives us the flexibility to pursue a targeted capital allocation strategy, which is centered around driving long term sustainable growth and delivering value to shareholders through three key levers: investment in the business, accelerating innovation and building upon our share repurchase cadence started in 2024. In the year, we meaningfully delivered on these capital allocation priorities with $200,000,000 in announced share buybacks, representing roughly 6% of outstanding shares and the acquisition of Mystery Ranch and ButterPack. These deals enabled the accelerated launch of YETI Cast Iron Cookware and the limited release of the Bozeman backpack in 2024. This is what we mean when we talk about our capital allocation strategy driving innovation.

Matthew Reintjes
Matthew Reintjes
President, CEO and Director at YETI

Notably in the fourth quarter, we also acquired capabilities, technology and IP that provides us with a foundation to engineer and develop a unique powered cooler system. We believe this technology is highly complementary to our existing hard cooler portfolio and is another example of the significant opportunity we see for future product innovation. Over the year, we also made great progress on our supply chain diversification. We achieved our target of 20% of our global drinkware capacity shifted outside of China by the end of twenty twenty four. And importantly, we are firmly ahead of plan and now expect that by the end of twenty twenty five to have 80% of U.

Matthew Reintjes
Matthew Reintjes
President, CEO and Director at YETI

S. Drink bar capacity located outside of China. Our team's strong operational execution across sourcing, process and automation improvements as well as cost and service optimization gives us tremendous confidence in our ability to cost effectively support our growing global demand. Looking ahead to 2025 and beyond, I'm more excited than ever about the opportunities to drive our business and our growing global brand. As we execute our plan, we expect to continue to deliver top line performance despite anticipated FX headwinds and market dynamics that Mike will discuss in more detail shortly, while also expanding adjusted operating margins and strong earnings growth, all while maintaining a very healthy balance sheet.

Matthew Reintjes
Matthew Reintjes
President, CEO and Director at YETI

While we expect macro pressures to persist in 2025, our long standing strategic growth priorities remain the same, which we believe will support our ability to deliver long term sustainable growth. Turning to brand. Numerous enthusiast communities are at the core of what we do, supporting their activities and pursuits. The deep connectivity and trust we have fostered is evident in the testimonies of YETI owners and the strong engagement we've seen over the last year. Our most recent U.

Matthew Reintjes
Matthew Reintjes
President, CEO and Director at YETI

S. Owner study completed in December underscores the strength of our brand. 2024 was the seventh consecutive year that 95% of YETI owners surveyed responded they have recommended YETI to peers, highlighting our incredible brand loyalty and a testament to our products. Moreover, the study shows that our consumers want us to be in the newer categories we're scaling, in particular bags and travel. This, along with our key design attributes of durability, performance and design, gives us confidence in our unique positioning and differentiation in the market.

Matthew Reintjes
Matthew Reintjes
President, CEO and Director at YETI

To that end, in the fourth quarter, we continued to expand our presence and awareness through events, strategic partnerships and broadening ambassador engagement throughout our target communities. We made notable progress in the large, diverse and global worlds of hospitality and sports, where we continue to drive significant traction for our brand. In hospitality, we secured partnerships with a number of premium, experiential and excursion focused travel lodges and resorts across The U. S. And globe.

Matthew Reintjes
Matthew Reintjes
President, CEO and Director at YETI

In Europe, YETI also had an unmistakable presence at two key film festivals in our largest European markets during the quarter. Most notably, the twenty twenty four European Outdoor Film Festival kicked off in October, attracting over 190,000 spectators across 10 different countries. At each stop, YETI's brand and products were prominently featured. On SportsFront, our professional and collegiate sports partnerships accelerated in the fourth quarter, benefiting from events such as the NFL playoffs, Formula one's championship finale and the College Football Playoff, featuring two of our partners in Notre Dame and Ohio State. In the quarter, custom YETI bottles and cuffs were gifted at Major League Baseball's twenty twenty four Rawlings Gold Glove Awards as well as the twenty twenty four Heisman Trophy Ceremony.

Matthew Reintjes
Matthew Reintjes
President, CEO and Director at YETI

These are just a few recent anecdotes that highlight the relevance and resonance of our brand across occasions and pursuits on the field, in the stands and at home. YETI's expanding partnership with the Oracle Red Bull Racing team is another great testament to the quality of partners we have and the trust in our brand. Our successful and long standing Drinkware and Cooler partnership, which not only supports driver hydration but also pit crew performance, was on full display at the Austin Grand Prix in October and the Las Vegas GP in November, where Max Verstappen secured his fourth straight Formula one World Drivers' Championship. Images of Max and team sporting YETI product at the Austin GP race weekend earned our highest organic impressions in the fourth quarter. The strong collaboration has culminated in YETI also being named as the team's official bags and luggage partner as we head into the 2025 season, outfitting one of the most traveled sports organizations on the planet.

Matthew Reintjes
Matthew Reintjes
President, CEO and Director at YETI

As we look forward to 2025 and beyond, we see incredible runway to grow with new and existing partners and to continue to extend our reach to new markets, communities and consumers. Now turning to product innovation. 2024 was a landmark year for new innovation with 24 new product launches and record color introductions, driving strong demand and adoption across categories and geographies. Drinkware

Matthew Reintjes
Matthew Reintjes
President, CEO and Director at YETI

led on

Matthew Reintjes
Matthew Reintjes
President, CEO and Director at YETI

the innovation front, from hydration to broadening the portfolio into new areas such as barware, tableware and cookware. Overall, the breadth and depth of our Drinkware category offerings clearly differentiates YETI, with products developed for frequency and consistency of use across consumers' daily lives, broadening consideration and ownership while balancing and diversifying our portfolio. The consumer demand we saw for these products across our channels gives us confidence that our diversification strategy is resonating despite a more crowded and promotional hydration market focused on a very narrow set of solutions. On the cooler and equipment side, hardcoolers saw excellent growth across both new innovation and legacy products throughout the year with sustained performance in our Roadie and Tundra hardcooler families. Strong holiday demand supports the premium product and price point innovation strategy we discussed in previous quarters.

Matthew Reintjes
Matthew Reintjes
President, CEO and Director at YETI

In soft coolers, our backpacks and thermal lunch style bags continued their positive momentum into the year end. Turning to bags. Our portfolio had a fantastic quarter with great performance in our YETI Crossroads packs, Camino Totes and SciTiK and Panga dry bags. We also launched our limited run Bozeman pack, nodding to what's coming starting in the first half of twenty twenty five in a new range of everyday and all weather bags. This limited run product, inspired by YETI and Mystery Ranch designs, drew significant excitement and sold out quickly.

Matthew Reintjes
Matthew Reintjes
President, CEO and Director at YETI

We have a big opportunity in front of us with a massive global addressable market across premium bags, packs and luggage and exciting launches that highlight our unique designs and capabilities, all leveraging our strong commercial engine and brand. After making major strides in new product innovation over the last two years, our focus on the first half of twenty twenty five will center around new packs, lunch style bags and boxes, insulated food transport, updates to our flagship Roadie 24 cooler and an exciting extension in our premium chairs to name a few, with more to come in the second half of twenty twenty five. Providing awareness and broadening consideration and ownership of our suite of products is a key priority, while also continuing to address new areas for expansion with our innovation roadmap. In coolers, we see a strong growth path in both hard and soft cooler solutions as we address more areas across our consumers' day to day lives from smaller format thermal bags to powered cooler systems. This acquisition of the IP around powered coolers is one example of how we're leveraging our balance sheet much like Mystery Ranch and Butter Pet to support the strategic and globally relevant evolution of our business, further expanding our technology, capabilities and market opportunity.

Matthew Reintjes
Matthew Reintjes
President, CEO and Director at YETI

As our innovation pipeline ramps and we extend further into emerging and legacy categories, we're giving consumers more reasons to choose YETI without compromising on the durability, performance and design we're known for. Turning now to our omnichannel strategy. As our portfolio of products grows, we continue to benefit from our diverse footprint across wholesale and DTC. Our flexibility to shift dynamically between channels allows us to maximize buying opportunities and strategically position our products where our consumers want to shop. Starting with wholesale.

Matthew Reintjes
Matthew Reintjes
President, CEO and Director at YETI

Our wholesale channel was strong throughout the year with new innovation resonating well with our partners and their shoppers, allowing us to maintain a solid channel inventory position. In the fourth quarter, our hard coolers were a highlight and we benefited from shelf space expansion at key retailers. Additionally, holiday merchandising around our giftable price points in drinkware, particularly barware and tableware and our Camel relaunch saw strong demand. Notably, 2024 was the first year wholesale actively participated in YETI's Gear Garage event, which drove excellent demand and sell through in the channel. We remain very pleased with our wholesale relationships and the interest in our innovation.

Matthew Reintjes
Matthew Reintjes
President, CEO and Director at YETI

We also continue to evaluate expansion opportunities that address new consumers during differentiated purchasing occasions, but importantly, complement our overall go to market. On the DTC side, while we saw a continuation of softer overall traffic trends, we were able to maximize our impact by staying nimble and strategically allocating marketing dollars to our various channels through major shopping periods. Year garage was a key moment for us during the quarter with our camo drop sparking huge demand, prompting high consumer engagement and purchase intent, which led to larger baskets and a continuation of the increased consumer value we saw in the third quarter. While we observe increased competition and promotional intensity in the market, YETI continued past practice of using targeted promotions in these high noise periods. Additionally, following the launch of our YETI ID program last quarter, we observed a significant increase in account creation, enabling deeper engagement with our customers and a more unique and personalized experience with the brand.

Matthew Reintjes
Matthew Reintjes
President, CEO and Director at YETI

Amazon continues to perform very well as our team drives strong operational efficiencies across the marketplace, effectively reaching consumers who shop that channel. In corporate sales, we saw robust growth across all regions with strong inbound sales performance domestically and great traction in international markets through our ongoing execution. On the retail front, we hit our plan of 24 stores by the end of twenty twenty four, adding six to the fleet over the course of the year. From a strategic perspective, our stores continue to play an important role in exposing consumers to our full portfolio of products and raising overall awareness of our brand, importantly, lifting our omni channel performance in markets where they're located. Over the next year, we plan to continue growing our presence on a similar cadence to 2024.

Matthew Reintjes
Matthew Reintjes
President, CEO and Director at YETI

The International Fund, twenty twenty four was a terrific year, growing 30%, reaching 18% of our total business mix. We continue to see great traction across markets with our product resonating and our go to market strategy gaining significant momentum. In Europe, we saw remarkable growth in the fourth quarter and for the full year, led by strong performance in The UK and Germany and broad demand across channels and partners. While we are still relatively early in our expansion with our significant ground ahead, we continued to grow our presence at key events and across local retailers, ending the year with over 1,000 doors in the region. Over the next year, we will continue to focus on our omni channel expansion by increasing our wholesale footprint, ramping up customization and growing our brand.

Matthew Reintjes
Matthew Reintjes
President, CEO and Director at YETI

Australia continued its strong momentum into the year end, capping off an exceptional year. In the fourth quarter, our national wholesale partners delivered strong performance and our DTC channel benefited from robust drinkware demand, particularly in custom drinkware. Baguetti brand has taken strong root in this market and we're energized about the opportunities we continue to see to grow our consumer base and broaden our omni channel presence. In Canada, we saw steady growth for the quarter and full year. In wholesale, we saw healthy sell through at our key retailers despite a more challenging consumer backdrop.

Matthew Reintjes
Matthew Reintjes
President, CEO and Director at YETI

And in DTC, strong performance in our custom drinkware business and corporate sales drove our performance in the quarter. Looking to the year ahead, we want to continue to double down on our customization and corporate sales efforts, expanding our offerings and growing our brand presence in the market. Over the next year, we will continue to drive forward our key international initiatives, growing brand awareness and building our successful omnichannel. In 2025, we will also expand our presence in the Asian market. In January, we held our first market introduction event in Tokyo with our team, brand ambassadors and partners all in attendance.

Matthew Reintjes
Matthew Reintjes
President, CEO and Director at YETI

We have already begun to lay the groundwork for the next step. And in the coming months, we will begin executing our proven market expansion playbook by launching our go to market, building a localized wholesale footprint and ramping up brand building activities as we establish the YETI brand and prepare for future scale and growth. Before I turn the call over to Mike, I want to reiterate my excitement and optimism about the path ahead for YETI. Our compelling brand, diverse and growing product portfolio and global market opportunity position us well to execute our long term growth potential. To that end, we look forward to providing more detail about each of our strategic priorities and how they will translate into long term growth and future shareholder value at an Investor Day later this year.

Matthew Reintjes
Matthew Reintjes
President, CEO and Director at YETI

Finally, none of what I discussed today would be possible without our outstanding team and all of our partners whose tireless efforts and commitment to the YETI brand drive our vision forward and position us for continued growth, margin expansion and profitability alongside our healthy balance sheet and strong cash generation. With that, I'll now turn the call over to Mike.

Michael McMullen
Michael McMullen
Senior VP, Principal Accounting Officer, Treasurer & CFO at YETI

Thanks, Matt, and good morning, everyone. I'll start by highlighting a few items that impacted our fourth quarter GAAP results in the current and prior year periods. Then I'll provide a review of our fourth quarter and full year 2024 performance. I'll then discuss our full year 2025 outlook before opening it up to your questions. First, our GAAP results reported today include an unfavorable recall reserve adjustment of $9,900,000 This is related to the product recall that was first announced in early fiscal twenty twenty three.

Michael McMullen
Michael McMullen
Senior VP, Principal Accounting Officer, Treasurer & CFO at YETI

As we reviewed the trend of recall claims and costs in 2024 and projected out the reserve that we would need going forward, we made the determination that this reserve adjustment was necessary. In this adjustment, sales were unfavorably impacted by $8,800,000 due to higher estimated consumer recall participation rates, cost of goods benefited by $700,000 due to lower recall related costs and SG and A was unfavorably impacted by $1,800,000 primarily due to higher recall claim volume. As a reminder, in the prior year period, we made a favorable recall reserve adjustment based on the trend of recall claims at that time. Per our standard reporting practices, the impact of these and other non operational or non recurring items are excluded from non GAAP results. All results discussed on today's call will be adjusted non GAAP metrics in order to better focus on the operating performance of the business during the fourth quarter and fiscal year '20 '20 '4.

Michael McMullen
Michael McMullen
Senior VP, Principal Accounting Officer, Treasurer & CFO at YETI

YETI just completed an incredibly strong year in 2024. We grew sales 9% to $1,840,000,000 with growth across all of our channels, categories and geographies. We grew operating income 18% to $3.00 $9,000,000 while still investing in future growth opportunities and infrastructure. We grew our earnings per share by 21% to $2.73 which reflects the impact of $200,000,000 in accelerated share repurchases executed during the year. We generated $220,000,000 of free cash flow and maintained our incredibly strong balance sheet, while also executing on three acquisitions, two of which contributed to growth in 2024.

Michael McMullen
Michael McMullen
Senior VP, Principal Accounting Officer, Treasurer & CFO at YETI

And we did all of that while continuing to expand the product portfolio and grow the brand in both The U. S. And around the world. Turning now to our fourth quarter results. Sales increased 7% to $555,000,000 which was above our expectations.

Michael McMullen
Michael McMullen
Senior VP, Principal Accounting Officer, Treasurer & CFO at YETI

We were very pleased with the execution of our teams during the quarter. Three growth highlights include strong performance in Coolers and Equipment, which grew 1710% growth in our D2C channel and continued strong momentum in our international business, which grew 27% in Q4. I'll discuss each of these in more detail as I review our performance in each of our categories, channels and geographies. First, by category. In the fourth quarter, coolers and equipment sales increased 17% to $189,000,000 dollars This was above our expectations, driven by excellent performance in hard coolers and in bags.

Michael McMullen
Michael McMullen
Senior VP, Principal Accounting Officer, Treasurer & CFO at YETI

Notably, this was our fourth consecutive quarter of double digit growth in C and E. In hard coolers, as anticipated, our Rode 15 performed extremely well during the holidays following its launch in late Q2. In soft coolers, our backpack coolers and smaller sized thermal lunch bags also continued to perform well. In equipment, bags had an outstanding quarter. We saw strong demand for our Crossroads, Camino, Sidekick and Panga families and our Mystery Ranch branded product.

Michael McMullen
Michael McMullen
Senior VP, Principal Accounting Officer, Treasurer & CFO at YETI

We are incredibly excited about the upcoming launch of our new lineup of YETI branded Mystery Ranch inspired packs in the first half of twenty twenty five. Within cargo, our GoBox product family and accessories also contributed to our growth, and we believe there is tremendous opportunity to scale this category through both product innovation and higher overall consumer awareness in 2025 and beyond. For the full year, sales in coolers and equipment increased 14% to $7.00 $7,000,000 For Drinkware, Q4 sales grew 3% to $358,000,000 As Matt said, the overall U. S. Drinkware market experienced higher levels of promotions and elevated competition during the quarter.

Michael McMullen
Michael McMullen
Senior VP, Principal Accounting Officer, Treasurer & CFO at YETI

Our overall Drinkware business in The U. S. Was down slightly year over year in Q4, but we saw good performance within several areas of our portfolio, including our highly giftable barware, our stackable cups and our bottle lineup. We believe this speaks to the importance of our efforts over the last few years to broaden and diversify our Drinkware portfolio to over 60 individual products. Outside The U.

Michael McMullen
Michael McMullen
Senior VP, Principal Accounting Officer, Treasurer & CFO at YETI

S, our Drinkware business grew over 20% with significant room for further growth in both existing and new markets. For the full year, Drinkware sales grew 7% to approximately $1,100,000,000 with growth in every region around the globe, including The U. S. Turning to our performance by channel. Direct to consumer sales were $377,000,000 growing 10% in the fourth quarter, representing 68% of total sales.

Michael McMullen
Michael McMullen
Senior VP, Principal Accounting Officer, Treasurer & CFO at YETI

We saw growth across all of our DUC channels with notable strength in corporate sales and our Amazon business. One of the key success stories within DUC during the quarter was our Drinkware customization offers, which are now live globally for both e commerce and corporate sales customers. For the full year, D2C sales increased 9% to $1,100,000,000 representing 60% of our overall sales mix, in line with full year 2023. The approximate mix within D2C remained relatively consistent year over year with 51% from our global YETI websites and YETI stores, 25% from the Amazon marketplace and 24% from corporate sales. In wholesale, sales increased 3% to $179,000,000 compared to the prior year quarter.

Michael McMullen
Michael McMullen
Senior VP, Principal Accounting Officer, Treasurer & CFO at YETI

In The U. S, sell through and sell in grew at similar rates in Q4, both in coolers and equipment and in drinkware, with particularly strong sell through growth within C and E. For the full year, wholesale channel sales increased 10% to $743,000,000 driven by positive sell in and sell through growth in every market in which we operate, including The U. S. Shifting to our international business.

Michael McMullen
Michael McMullen
Senior VP, Principal Accounting Officer, Treasurer & CFO at YETI

We saw another quarter of excellent growth internationally with our business outside The U. S. Increasing 27% to 109,000,000 in Q4. All of our regions grew with Australia and Europe continuing their exceptional double digit growth. Our efforts to drive brand awareness, grow our distribution network and roll out our omni channel model are working, and we see significant runway ahead of us as we continue to capitalize on the global opportunity for YETI.

Michael McMullen
Michael McMullen
Senior VP, Principal Accounting Officer, Treasurer & CFO at YETI

For the full year, international sales grew 30% to $339,000,000 representing 18% of total sales, up from 16% of sales last year. Before wrapping up on sales, note that the fourth quarter included 1,700,000 of gift card redemptions related to remedies offered to customers impacted by the product recall compared to $6,500,000 in gift card redemptions during the same period last year. On margins, gross profit increased 8% to $335,000,000 or 60.2 percent of sales, which is flat versus the prior year period. Drivers of gross margin included lower inbound freight costs and lower product costs, offset by higher customization costs and a number of other smaller items within our cost of goods sold. Full year gross profit increased 13 to $1,100,000,000 expanding 170 basis points to 58.6% of sales.

Michael McMullen
Michael McMullen
Senior VP, Principal Accounting Officer, Treasurer & CFO at YETI

The full year gross profit expansion was led by lower inbound freight costs and lower product costs. Before moving on to our SG and A expenses for the quarter, we would like to note that our breakout of SG and A expenses will be shifting from variable and non variable expenses to the following groupings: marketing costs employee compensation and benefits costs distribution and fulfillment costs depreciation and amortization expenses and finally, general and administrative costs. In the fourth quarter, SG and A expenses increased 7% to $224,000,000 or 40.3% of sales, which is flat compared to the prior year period. Distribution and fulfillment expense leverage on higher sales was offset by higher employee compensation and benefits costs and higher general and administrative costs. Full year SG and A expenses increased 11% to $768,000,000 increasing 40 basis points to 41.7% of sales.

Michael McMullen
Michael McMullen
Senior VP, Principal Accounting Officer, Treasurer & CFO at YETI

Operating income increased 8% to $111,000,000 or 19.9% of sales, a 10 basis point increase over the fourth quarter last year. For the full year, operating income grew 18% to $3.00 $9,000,000 a 120 basis point increase year over year to 16.8% of sales. Net income increased 7% to $85,000,000 or $1 per diluted share, representing growth of 11% versus the $0.9 per diluted share in the prior year period. On a full year basis, net income grew 19% to $234,000,000 or 2.73 per diluted share, representing growth of 21% versus the $2.25 per diluted share during the same period last year. Now turning to our balance sheet.

Michael McMullen
Michael McMullen
Senior VP, Principal Accounting Officer, Treasurer & CFO at YETI

We ended 2024 with $359,000,000 in cash as compared to four thirty nine million dollars at the end of twenty twenty three. We generated $220,000,000 of free cash flow during the year, which helped enable the strategic deployment of capital that I mentioned earlier, including $200,000,000 in share repurchases and the acquisitions of Mystery Ranch, Butter Pat and the IP for a future powered cooler platform. Inventory decreased 8% year over year to $310,000,000 Total debt, excluding finance leases and unamortized deferred financing fees, was $78,000,000 compared to $82,000,000 at the end of the fourth quarter last year. Now turning to our outlook for fiscal twenty twenty five. We expect full year sales to increase between approximately 57% compared to fiscal twenty twenty four's adjusted net sales.

Michael McMullen
Michael McMullen
Senior VP, Principal Accounting Officer, Treasurer & CFO at YETI

With the growth of our international business and the recent strengthening of The U. S. Dollar, we expect an approximately 100 basis point headwind from FX in 2025. From a phasing perspective, we expect total growth to be stronger in the second half of the year versus the first half of the year, specifically driven by Drinkware. Drivers of this dynamic include the pacing of our Drinkware innovation, which is much heavier weighted into the second half of the year and a stronger Drinkware growth compare in the first half of the year versus the second half of the year.

Michael McMullen
Michael McMullen
Senior VP, Principal Accounting Officer, Treasurer & CFO at YETI

Specifically, we expect low to mid single digit growth in the first half with growth in the high single to low double digit range in the second half. From a channel perspective, we expect our wholesale and D2C businesses to grow relatively in line with each other in 2025. By category, we continue to expect coolers and equipment growth to outpace Drinkware growth in 2025. We have great momentum in several categories within C and E and given our planned innovation, we believe that we are set up for another strong year. We expect Drinkware to grow in the mid single digit range in 2025.

Michael McMullen
Michael McMullen
Senior VP, Principal Accounting Officer, Treasurer & CFO at YETI

That includes first half growth that is approximately flat and second half growth that will approach double digits as our innovation engine resumes. By quarter, in the first half, we expect Drinkware to be down slightly year over year in Q1, but return to growth in Q2. I also want to call out that the Drinkware growth dynamics in the first half of the year are primarily within The U. S. Market.

Michael McMullen
Michael McMullen
Senior VP, Principal Accounting Officer, Treasurer & CFO at YETI

We expect our Drinkware business outside The U. S. To grow consistently at a double digit rate each quarter during 2025. From a geographic perspective, we expect total domestic growth in the mid single digit range and total international growth in the mid teens even with approximately 500 basis points of growth headwinds from FX. We expect international growth to be relatively consistent during the year, while The U.

Michael McMullen
Michael McMullen
Senior VP, Principal Accounting Officer, Treasurer & CFO at YETI

S. Will see stronger growth in the second half versus the first half. As Matt mentioned, we are also very excited about the launch of our Japanese commercial business during 2025. We see 2025 as a foundational year for YETI KAPAN with 2026 serving as the first full year of operations. We expect gross margins to remain relatively flat for the year with continued benefits from product costs offset by sales mix and FX headwinds.

Michael McMullen
Michael McMullen
Senior VP, Principal Accounting Officer, Treasurer & CFO at YETI

From a phasing perspective, we expect the impact from sales mix to be largest in the first quarter, and therefore, we expect a roughly 50 basis point decline in gross margins year over year in Q1. The rest of the year, we expect small year over year increases in gross margin each quarter as sales mix normalizes. One dynamic that we have not included in our outlook for the year is tariffs. As you all know, it remains a fluid situation, which we are monitoring closely. As Matt said, we are ahead of plan in our efforts to strategically shift our supply chain outside of China.

Michael McMullen
Michael McMullen
Senior VP, Principal Accounting Officer, Treasurer & CFO at YETI

This progress has been made possible through the extraordinary work of our team and our strong, long standing relationships with our existing suppliers. As we progress through the year, we will continue to look at all mitigating actions available to us, including price. For SG and A, we expect year over year growth to be slightly below our sales growth in 2025. We will continue to invest behind our key initiatives, mobile expansion, supply chain diversification, continued B2C growth and innovation acceleration. The timing of some of these discrete investments will drive roughly two fifty basis points of SG and A deleverage in Q1, but we expect improvement as we go through the year and we expect to end the year with roughly 10 basis points of leverage in SG and A.

Michael McMullen
Michael McMullen
Senior VP, Principal Accounting Officer, Treasurer & CFO at YETI

As a result, we expect adjusted operating income to increase between approximately 5.57.5% in 2025. We expect a year over year decline in operating income in Q1, but for the remaining three quarters, we expect operating income to grow in line to slightly above sales. We estimate that FX will have a roughly three fifty basis point impact on our operating income growth in 2025. Below the operating line, we expect an effective tax rate of approximately 24.5% for fiscal twenty twenty five, in line with the prior year. Based on full year diluted shares outstanding of approximately $84,300,000 we expect adjusted earnings per diluted share to increase between 68% to between $2.9 and $2.95 compared to $2.73 in fiscal twenty twenty four.

Michael McMullen
Michael McMullen
Senior VP, Principal Accounting Officer, Treasurer & CFO at YETI

We estimate that FX will be a headwind of approximately $0.1 per share in 2025. As it relates to our share repurchase program, our Board recently increased our share repurchase authorization by $350,000,000 bringing the total available under our authorization to $450,000,000 as of today. While our outlook does not include any impact from future share repurchases during 2025, we do expect to leverage share repurchases as part of our capital allocation strategy this year. We expect capital expenditures of between $60,000,000 and $70,000,000 which reflects continued investments in technology, new product innovation and our supply chain. We expect free cash flow of approximately $200,000,000 in 2025, representing another strong free cash flow year for the business.

Michael McMullen
Michael McMullen
Senior VP, Principal Accounting Officer, Treasurer & CFO at YETI

In summation, we are very proud of the results we delivered in 2024, even in the context of a challenging macro and consumer backdrop. While we anticipate headwinds from FX and continued inconsistency in The U. S. Market, we believe we are well positioned to deliver against our outlook. We will continue to execute on our strategic priorities, which we believe will support our ability to deliver long term sustainable growth.

Michael McMullen
Michael McMullen
Senior VP, Principal Accounting Officer, Treasurer & CFO at YETI

2025 is an exciting year for YETI, and we are eager to continue growing our brand, delivering innovation and driving omni channel growth on a global basis. Now, I would like to turn the call back over to the operator to take your questions.

Operator

Thank

Operator

you.

Operator

Your first question comes from Peter Benedict with Baird. Your line is now open.

Peter Benedict
Managing Director - Equity Research at Robert W. Baird & Co

Hi, good morning guys. Thanks for taking the question. Mike maybe on tariffs, so I was wondering if you could maybe frame for us it looks like the 10% China tariff maybe the one that's most certain here. I know you talked about being ahead of plan in terms of diversifying out of China. Maybe what would that level of tariff do to kind of the outlook assuming no offsets?

Peter Benedict
Managing Director - Equity Research at Robert W. Baird & Co

And curious if you could maybe frame your exposure to some other markets on imports, places like Mexico that have been in the news of late? That's my first question.

Michael McMullen
Michael McMullen
Senior VP, Principal Accounting Officer, Treasurer & CFO at YETI

Hey, Peter. Thanks for the question. So yes, if you took the tariff announcement on February 1 that went into effect on February 4, which, is essentially the 10%, tariff on goods coming out of China, We think that that would have less than a $10,000,000 impact on the year in terms of additional costs.

Michael McMullen
Michael McMullen
Senior VP, Principal Accounting Officer, Treasurer & CFO at YETI

We, that is not in our outlook, for a few reasons. One, it's obviously a very fluid, dynamic situation. And number two, I mean, that's a we view that as a manageable number that, you know, we are going to continue to work, and you know, we're going to do that via additional cost, optimization. And we're also, as we've said consistently, we're, we're gonna we are going to continue to look at price. But that kind of gives an idea of if that, the tariff that you referenced were to stay in place for the full year, that's what we could be looking at.

Michael McMullen
Michael McMullen
Senior VP, Principal Accounting Officer, Treasurer & CFO at YETI

In terms of other regions, you know, I guess Mexico is the one I'd call out, but it is a far lower piece of our business than what we talked about with China. And we're running the same playbook that we're running there. We're running in Mexico as well, continuing to work with our partners to find ways to offset any potential costs. But obviously nothing has been officially announced there.

Peter Benedict
Managing Director - Equity Research at Robert W. Baird & Co

Got it.

Peter Benedict
Managing Director - Equity Research at Robert W. Baird & Co

Okay. That's really helpful. My follow-up would be, kind of around the acquisition that you did in the fourth quarter. Do you expect that to continue? It doesn't sound like it's going to contribute to sales this year, but maybe it is a little bit.

Peter Benedict
Managing Director - Equity Research at Robert W. Baird & Co

I don't know if you could maybe frame that or is this more of a development type situation? And Matt, just how do you maybe speak to how you're thinking about maintaining discipline within M and A? You obviously have a lot of cash flow. I'm sure you guys get shown anything under the sun that's even remotely tangential to your business. Just maybe talk about your approach to M and A, how you're thinking about it and how you remain disciplined on that front?

Peter Benedict
Managing Director - Equity Research at Robert W. Baird & Co

Thank you.

Matthew Reintjes
Matthew Reintjes
President, CEO and Director at YETI

Good morning, Peter. Thanks for the question. I'll start with the powered cooler technology and IP that we acquired in the fourth quarter. We're incredibly excited about how that fits within our overall architecture of hard coolers and how that fits underneath the YETI brand and the global opportunity for it. So, we're very excited about that.

Matthew Reintjes
Matthew Reintjes
President, CEO and Director at YETI

As you said, we don't expect it to contribute to 2025. It is an in development program off of a platform that, that we had spent some time looking at and and had an opportunity to to bring that in to accelerate what we think will deliver, a what we believe will deliver a unique power cooler solution that fits alongside our funders and roadies and the rest of our portfolio. So, more to come on that, but we're working aggressively and actively on that program right now. I think as it relates to broader M and A, I think what I would point to is in 2024, '2 really good illustrations of how we think about M and A. We look for things that bring ingredients or bring technologies or bring know how to accelerate stuff that very likely is already on our product roadmap and it gives us chance to accelerate those accelerate those programs fitting underneath the YETI brand.

Matthew Reintjes
Matthew Reintjes
President, CEO and Director at YETI

So, we're highly disciplined about, about how we think about M and A. As you said, it's, there's a lot of things out there. We have a lot of conversations, and we enjoy kind of getting to getting to see all the different areas where where we believe YETI could go. We'd probably spend as much time on should we go there and then how does how does that acquisition or how does the acquisition of the technologies, materials, capabilities, know how accelerate, our vision for the expansion of the YETI product roadmap.

Peter Benedict
Managing Director - Equity Research at Robert W. Baird & Co

Great.

Peter Benedict
Managing Director - Equity Research at Robert W. Baird & Co

Thanks so much. Good luck.

Matthew Reintjes
Matthew Reintjes
President, CEO and Director at YETI

Thanks, Peter.

Operator

Your next question comes from Brooke Roach with Goldman Sachs. Your line is now open.

Brooke Roach
Brooke Roach
Vice President, Equity Research at Goldman Sachs

I was hoping you could elaborate on your comments regarding U. S. Growth in 2025 and the dynamics that you're seeing specifically in The U. S. Drinkware business.

Brooke Roach
Brooke Roach
Vice President, Equity Research at Goldman Sachs

What are you seeing in wholesale versus DTC growth for U. S. Drinkware as you enter 2025? And what gives you confidence in that second half inflection to a return to stabilized growth in The U. S?

Brooke Roach
Brooke Roach
Vice President, Equity Research at Goldman Sachs

Thank you so much.

Michael McMullen
Michael McMullen
Senior VP, Principal Accounting Officer, Treasurer & CFO at YETI

Hey, Brooke. The first part of your question was, I think, muted. So if we don't address everything you asked, please let me know. So in terms of U. S.

Michael McMullen
Michael McMullen
Senior VP, Principal Accounting Officer, Treasurer & CFO at YETI

Drinkware in 2025, so like we called out, we said, we think in general The U. S. Will be in the mid single digit growth range. We think Drinkware globally will be in that range as well. We did want to provide some color really for the first time on kind of what we see at that U.

Michael McMullen
Michael McMullen
Senior VP, Principal Accounting Officer, Treasurer & CFO at YETI

S. Drinkware level. And, we think it will be essentially flat in the or drinkware in total will be flat in the first half, down in Q1. But as we look to the second half, I think there's a couple of things to call out. One, we do have, our the phasing or the pacing of our innovation is much more second half weighted, this year.

Michael McMullen
Michael McMullen
Senior VP, Principal Accounting Officer, Treasurer & CFO at YETI

And I think one of the drivers of that is, you know, all the work we're doing around our supply chain and diversification of that, I mean, that is that does have an impact on sort of our that did impact the pacing in our product roadmap, this year, number one. You know, in terms of why we're confident, because when we look at what we have planned coming out in the second half, I mean, we feel like it's a robust lineup that will allow us to get back to that growth rate. The other thing I'd say is, from a compare perspective, Drinkware had a strong first half of last year. I mean, it grew 12% in the first quarter of twenty twenty four. And so as we look at from a compare standpoint, there's a pretty big difference in terms of growth rate in the first half versus the second half for Drinkware.

Michael McMullen
Michael McMullen
Senior VP, Principal Accounting Officer, Treasurer & CFO at YETI

And so I think that's playing a role as well.

Matthew Reintjes
Matthew Reintjes
President, CEO and Director at YETI

Yes. Brooke, this is Matt. The one thing I would add, early in January, I was in, visiting our factories, the drinkware factories that were transitioning out of China. And I would say that piece of a big focus at YETI in the first half of the year is, the successful diversification of our supply chain, which allows us to have what we think is a really exciting innovation roadmap in the second half within Drinkware. And so I think when you think quarter to quarter, there's some movement there.

Matthew Reintjes
Matthew Reintjes
President, CEO and Director at YETI

Overall, we feel great about the potential expansion in Drinkware, the continued adoption of our new innovation in Drinkware, both in The U. S. And then obviously we expect continued outsized growth outside of The U. S. With incredible runway in front of it.

Brooke Roach
Brooke Roach
Vice President, Equity Research at Goldman Sachs

Thanks, Matt. And if I could just follow-up. Can you discuss the outlook for DTC versus wholesale dynamics in The U. S. Market going forward?

Brooke Roach
Brooke Roach
Vice President, Equity Research at Goldman Sachs

It seems like you've got some great momentum with ongoing legacy consumers and lovers of the brand, some good innovation coming. How does that play out in DTC versus wholesale in your core market?

Matthew Reintjes
Matthew Reintjes
President, CEO and Director at YETI

Yes. I think in The U. S, it's been interesting as we went into the 2020 period and the hard shift to DTC, and what we've been excited about is our ability to retain, the customers that we acquired through that period and build a strong DTC business. What's been as exciting is watching wholesale come back over that time. And so we think we've got a really balanced omnichannel.

Matthew Reintjes
Matthew Reintjes
President, CEO and Director at YETI

I think the diversification we have underneath DTC and the diversity of wholesale partners we have, I think gives us a lot of opportunity to win and to find areas where we can continue to grow. And so I think, you know, I think we haven't updated any sort of long term view on on DTC versus wholesale, but I think they're working in a really complementary way right now. We have incredible wholesale partners. We have strong, DTC channels. And so that's our focus is really how do we drive getting YETI in front of consumers when and where they want to shop.

Matthew Reintjes
Matthew Reintjes
President, CEO and Director at YETI

And we're following, what we think has been a change in consumer dynamic on where they choose to shop.

Brooke Roach
Brooke Roach
Vice President, Equity Research at Goldman Sachs

Great. Thanks so much. I'll pass it on.

Operator

Your next question comes from Megan Lapp with Morgan Stanley. Your line is now open.

Megan Clapp
Megan Clapp
Equity Research Analyst at Morgan Stanley

Hi there. Thanks so much. Just first wanted to clarify one thing. I think you mentioned the fifty third week in the press release in 2025. I don't think that's something most in consensus we're modeling.

Megan Clapp
Megan Clapp
Equity Research Analyst at Morgan Stanley

So I just wanted to clarify that fifty third week is included in your top line. And how does that play into the first half, second half dynamics or top line growth? If I'm doing my math correctly, I think it could be kind of four points to the back half. So is that part of the expected acceleration in the back half as well? Thank you.

Michael McMullen
Michael McMullen
Senior VP, Principal Accounting Officer, Treasurer & CFO at YETI

Hey, Meghan. Thanks for the question. So, you know, I think the fifty third week for us is a, is a relatively minor impact. It is less than a point of growth on the total year. The last time we saw this in 2020, we call that a we called that less than a point of growth and that one was when we were much smaller than we are now.

Michael McMullen
Michael McMullen
Senior VP, Principal Accounting Officer, Treasurer & CFO at YETI

It's our lowest week of sales of the year. So minimal impact from a top line perspective. And if anything, from an operating income, it's slightly, it's slightly dilutive on the year. So no real impact that we would call out, from that fifty third week.

Megan Clapp
Megan Clapp
Equity Research Analyst at Morgan Stanley

Okay, great. That's super helpful. And maybe as a follow-up on Drinkware, I wanted to just ask a little bit more about the competitive environment and the promotional intensity you're seeing. Did you see anything in the fourth quarter or anything year to date that you would describe as potentially irrational from competition? And I think you mentioned in the prepared remarks that you continued your strategy of maintaining more targeted promotions.

Megan Clapp
Megan Clapp
Equity Research Analyst at Morgan Stanley

But if you are seeing a bit more promotional intensity, how do you think about adjusting your promotional strategy or your pricing strategy in that category to make sure you're maintaining share?

Matthew Reintjes
Matthew Reintjes
President, CEO and Director at YETI

Hi, Megan. While I won't speak to the rationality or irrational behaviors of kind of the others in the market, what I would say is we believe and we continue to show that our diversification of our drinkware approach is working and is showing resonance with consumers that we can continue to use promotions as a tool for transitioning in and out of products as we drive more innovation, as we continue to up the cadence of our innovation. I don't think I think it's more about the market backdrop and kind of the consumer mindset than something that we're gonna strongly react to. I also think, as I mentioned in my remarks, the idea that we continue to broaden and diversify the use cases and the reasons for people to buy is going against a bit of where the focus is in the drinkware category right now, which tends to be around a pretty consolidated set of products. And so I think, yeah, I feel good about I feel good about our short term strategy.

Matthew Reintjes
Matthew Reintjes
President, CEO and Director at YETI

I feel really good about our mid term strategy and continue to drive YETI

Matthew Reintjes
Matthew Reintjes
President, CEO and Director at YETI

growth

Matthew Reintjes
Matthew Reintjes
President, CEO and Director at YETI

and YETI relevance in drinkware both in The U. S. And obviously around the world.

Megan Clapp
Megan Clapp
Equity Research Analyst at Morgan Stanley

Okay. Awesome. Thank you.

Operator

Your next question comes from Randy Konik with Jefferies. Your line is now open.

Randal Konik
Managing Director at Jefferies & Company Inc

Yes, thanks a lot. I guess a couple of things. Just on the Matt, when you talked about innovation and ramping, maybe just give us some perspective on how you think about what that looks like over the next twelve to twenty four months and how that's perhaps different or the same from a trading perspective, amount of newness that we've seen in the last couple of years. Just kind of contextualize that for us. And just on the bag side of the ledger, maybe just also give us some perspective on how big is that kind of category now and kind of what you think about the opportunity long term there as it relates to this innovation question?

Randal Konik
Managing Director at Jefferies & Company Inc

Thanks.

Matthew Reintjes
Matthew Reintjes
President, CEO and Director at YETI

Yes. Thanks, Randy. I think what I would say is, you saw an uptempo in innovation in 2024 and that was really the result of a little bit of catch up from, the twenty twenty, twenty twenty one period and getting back online with our partners and incredible work by our product development team. I think that pacing is going to be largely consistent going forward. We see opportunities to continue to bring vitality and expansion in our drink waters.

Matthew Reintjes
Matthew Reintjes
President, CEO and Director at YETI

We've talked about a couple of times on this call. You've seen us bring vitality and expansion into our hard coolers and we called out the success of that work. I think we see the same thing in our protective case and go box line of products. And I called out even some things on the call, an expansion into our chair, our small chair franchise, which is really fun and a great product that I think is very Yeti. I think as

Matthew Reintjes
Matthew Reintjes
President, CEO and Director at YETI

it relates to bags,

Matthew Reintjes
Matthew Reintjes
President, CEO and Director at YETI

you know, we've we've talked about early this year, two new families of bags coming out. One of those, a direct result of what we think is our thoughtful approach to to M and A. So it has as some of the the ingredients that we acquired in Mystery Ranch with the design and capabilities that we had at YETI. So, I think it'd be a great kind of new step into what we think is a really, really large global bags and travel opportunity. We haven't dimensionalized the size of our bags business today, but we did call out the strong growth in 2024, the kind of acceleration of the cadence of innovation that we have coming in 2025.

Matthew Reintjes
Matthew Reintjes
President, CEO and Director at YETI

And I think in that category specifically, you're going to see us do more and more of that. And that is, and I think it fits with the YETI brand, it fits with the YETI consumer, both the existing ones and the ones we acquire. And so we're very excited about what that can become.

Randal Konik
Managing Director at Jefferies & Company Inc

Great. Last question. Maybe you'd be really helpful to us if you dimensionalize international from a vantage point of it. I think you said mid teens growth. So maybe kind of talk about what countries that's primarily coming from?

Randal Konik
Managing Director at Jefferies & Company Inc

And then maybe kind of looking out a few more years from now, the country opportunities of focus that you may not be in yet or you may be starting just to go into that that growth forecast for 2025? Just kind of give some perspective of that enjoying growth opportunity in the international markets and where the markets are ahead. Thanks.

Michael McMullen
Michael McMullen
Senior VP, Principal Accounting Officer, Treasurer & CFO at YETI

Hey, Randy. So, in terms of the first part of the question, I'll take. I think well, first of all, we've got growth plan in 2025 or including the outlook in every region outside the You know, we talked about the strength in 2024 of Europe and Australia. And I think it's fair to say that that's planned to continue in 2025, with the faster growth coming from Europe given the size of that of our business there. We haven't been there as long as we've been in Canada or Australia.

Michael McMullen
Michael McMullen
Senior VP, Principal Accounting Officer, Treasurer & CFO at YETI

And frankly, just the overall market opportunity that we have in front of us in Europe. So that's going to be our fastest growing region in 2025.

Michael McMullen
Michael McMullen
Senior VP, Principal Accounting Officer, Treasurer & CFO at YETI

The other

Michael McMullen
Michael McMullen
Senior VP, Principal Accounting Officer, Treasurer & CFO at YETI

thing that we talked about was Japan. We will start our commercial sales there. But it's not an overly significant impact in 2025. I think really the first full year we expect that to be a meaningful driver is 2026.

Matthew Reintjes
Matthew Reintjes
President, CEO and Director at YETI

Yes, Randy. Let me just add a little bit of color on that. So you know, when we think about The UK and Europe alone, we're so early stage in the potential opportunity there. And we have an incredible team, that is kind of building the momentum in that market that I think we're going to be talking about The U. K.

Matthew Reintjes
Matthew Reintjes
President, CEO and Director at YETI

And Europe as a growth driver for YETI for years to come. And I think that's got that kind of opportunity, just based on product relevance, market size, what we're seeing across multiple countries, both the English speaking and the non English speaking, parts of parts of The UK and Europe. You know, in early January, I was in Tokyo for the launch of our brand there. We had partners from all over the region, or potential partners from all over the region that showed up to a mini trade fair that we held in Tokyo. And I will tell you, it felt like what I had seen when we got going in the early days in Australia, in the early days in The UK, the early days in Germany.

Matthew Reintjes
Matthew Reintjes
President, CEO and Director at YETI

The energy and the potential, really, you know, I walked away from that with our team and we're fired up for what, what Asia can bring.

Randal Konik
Managing Director at Jefferies & Company Inc

Very helpful. Thanks guys.

Operator

Your next question comes from Peter Keith with Piper Sandler. Your line is now open.

Matthew Reintjes
Matthew Reintjes
President, CEO and Director at YETI

Thanks. Good morning to both of you.

Peter Keith
Peter Keith
Managing Director & Senior Research Analyst at Piper Sandler Companies

I know you talked about having a very diverse DTC customer base as well as diverse group of wholesalers. Could you talk about some of the things you're doing just to raise customer awareness around product launches? And as you have this higher tempo of launches, does that also require maybe spending a little bit more on advertising?

Matthew Reintjes
Matthew Reintjes
President, CEO and Director at YETI

Yes. Hey, Peter, good morning. A couple of things on that. I think what the diversity of our channels does is, it whether that's DTC and everything from our flagship e commerce sites to Amazon to the corporate sales is it gives us pretty efficient ways to get out in front of in front of consumers. And so it's a cost efficient, in many ways, a cost efficient way of creating marketing.

Matthew Reintjes
Matthew Reintjes
President, CEO and Director at YETI

Our corporate sales, our partnerships, Amazon in particular in there. You know, I think the thing that we're looking at and you'll start to see us shift is we're actually moving some of our marketing, up funnel a bit to the mid funnel to create, that combination between brand awareness and product marketing and awareness versus lower funnel transaction which I think is the more contested, the contested part of marketing spend right now. So, what we're doing is we have kind of constant review between broad brand awareness spend and our performance marketing. And we're pretty dynamic period to period on where we're putting the pressure out there. We keep the of building the overall brand halo through many of the things that you're familiar with ambassadors, partnerships, our sponsorship type relationships.

Matthew Reintjes
Matthew Reintjes
President, CEO and Director at YETI

And then as we go down into the more kind of product launch awareness type mid funnel things, we move between brand focused and product focused. So I would say I wouldn't expect a big pop in our marketing spend. It's more about the micro adjustments we make within, what we think is a really, really thoughtful, thoughtful kind of marketing budget.

Peter Keith
Peter Keith
Managing Director & Senior Research Analyst at Piper Sandler Companies

Okay. Helpful. And then maybe just as a related question, as you're leaning into some categories that are whether they're new or existing like bags, cookware, chairs, Are you thinking about expanding wholesale relationships maybe with some needs players? Or is this something where you leverage the existing wholesale relationships you have in place today?

Matthew Reintjes
Matthew Reintjes
President, CEO and Director at YETI

I'll start with, we have a, as you called out and I mentioned earlier, we have a diverse set of wholesalers that we think can represent our product portfolio. Now, as our portfolio evolves, all wholesalers aren't, probably the right place for everything just based on the nature of the customer that comes in and what they represent. So one of the things we work very closely with our existing partners on is the merchandising and what makes sense inside their stores. Alongside that and, you know, I mentioned it on the in the prepared remarks, we're constantly looking at partners that we think could fill in and complement our wholesale and then ultimately complement our entire omnichannel. You know, whether that is some more kind of homewares type places for some of our recent launches in 2024 or as our portfolio expands, as bags expands, it creates potential new opportunity for places for YETI in wholesale to be placed.

Matthew Reintjes
Matthew Reintjes
President, CEO and Director at YETI

So not no different, position or shift from I think where we've been over the last nine, ten years, which is we want to build as strong a wholesale network and as complimentary a wholesale network, as we can to support the product roadmap that we have and the product roadmap that's coming.

Peter Keith
Peter Keith
Managing Director & Senior Research Analyst at Piper Sandler Companies

Very good. Thank you very much.

Operator

Your next question comes from Sabrina Bassamucci with William Blair. Your line is now open.

Sabrina Baxamusa
Equity Research Associate at William Blair

Hi. This is Sabrina on for Philip Lee. Thanks for taking our question. Could you provide some insight into how demand trends have been tracking quarter to date? And then any insight into sell through or sell in trends?

Michael McMullen
Michael McMullen
Senior VP, Principal Accounting Officer, Treasurer & CFO at YETI

Hi. Good morning. So, we're not we don't traditionally provide sort of commentary of the current quarter when we release earnings. But in terms of selling and sell through, what I'd say is, first of all, we saw sell through growth overall for the year last year in every region, including. The other thing I'd say is in Q4 specifically, Q4 and or sell through and sell in were aligned for each category.

Michael McMullen
Michael McMullen
Senior VP, Principal Accounting Officer, Treasurer & CFO at YETI

So we saw, you know, really strong growth within C and E both in sell in and sell through. And drink where sell through kind of matched the sell in that we saw. So, I think where that's left is we feel good about where channel inventories are. They're healthy sort of heading into the year. And we'll continue to manage that as we go into, we go through 2025.

Sabrina Baxamusa
Equity Research Associate at William Blair

Great. Thank you. And then going back to kind of the promotional environment, you kind of of competitive in promotional pressures during the fourth quarter. Do you expect those to remain elevated headwinds going forward? Or does your guide embed some of that normalizing throughout the year?

Matthew Reintjes
Matthew Reintjes
President, CEO and Director at YETI

Yes. I think that we do expect that drinkware in particular, I think some of this is related to the fact that it's a pretty consolidated, assortment out there that's competing for a relatively narrow portion of the market. And I think there's a lot of competition around creating, kind of playing into the value piece. So I wouldn't expect it to end. We contemplate all of that in our guide.

Matthew Reintjes
Matthew Reintjes
President, CEO and Director at YETI

I think more importantly, our expansion strategy, which we've had underway for a number of years, we think is the ultimate mid and long term defense to kind of the competitive environment that exists right now. And we think we'll continue to persist in 2025.

Sabrina Baxamusa
Equity Research Associate at William Blair

Great. Appreciate the help. Thanks.

Operator

Your next question comes from Joe Altobello with Raymond James. Your line is now open.

Martin Mitela
Martin Mitela
Senior Equity Research Associate at Raymond James

Hey, good morning. This is Martin on for Joe. Where do you see wholesale growth coming from? Is it new doors or is it expanded shelf space? And additionally, you did mention wholesale expansion opportunities that address new consumers.

Martin Mitela
Martin Mitela
Senior Equity Research Associate at Raymond James

What might that look like?

Michael McMullen
Michael McMullen
Senior VP, Principal Accounting Officer, Treasurer & CFO at YETI

Yes. In terms of the first part of the question, I think it's a like Matt said, we were constantly looking at new opportunities within wholesales. We don't have a significant door expansion planned in our outlook. What I'd say is it's a combination of sell through growth, of extortment expansion as our product portfolio grows. You know, we're having conversations with our existing wholesale partners about, you know, looking at ways to sort of accommodate that expansion.

Michael McMullen
Michael McMullen
Senior VP, Principal Accounting Officer, Treasurer & CFO at YETI

And we've seen good success there, as our product portfolio grows. So I'd say it's a combination of both just overall consumer demand, and us constantly looking at our footprint and optimizing our wholesale footprint.

Matthew Reintjes
Matthew Reintjes
President, CEO and Director at YETI

And Martin, I would just add to the piece of the question about, kind of expansion opportunities. I mean, our focus is on, where people shop for what. And as our portfolio continues to evolve, we continue to analyze our wholesale footprint and say, do those match and do we intercept the consumers in those shopping occasions? And so, you know, it's a broad range from small independents to bigger players that are the opportunities for us. I wouldn't say the opportunity set has fundamentally changed.

Matthew Reintjes
Matthew Reintjes
President, CEO and Director at YETI

Our analysis of them is what we kind of keep calibrating on. So nothing specific to call out, but we are focused on and we have been for years on we want strong wholesale partnerships that continue to grow, and we want to bring innovation to them. So, we bring newness to their customers. And those are the best relationships we've had for years.

Martin Mitela
Martin Mitela
Senior Equity Research Associate at Raymond James

Great. That's very helpful. Thank you.

Operator

There are no further questions at this time. I will now turn the call over to Matt for closing remarks.

Matthew Reintjes
Matthew Reintjes
President, CEO and Director at YETI

Thanks everyone for joining us. We look forward to speaking with you on our Q1 call.

Operator

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating in Assa. Please disconnect your lines.

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