YETI

Business Context and Reporting Period

Company: YETI Holdings, Inc.
Filing Type: Form 10-K (Annual Report)
Reporting Period: Fiscal year ended January 3, 2026 (53-week year).
Business Overview: YETI is a global designer, retailer, and distributor of innovative outdoor products, including coolers, drinkware, bags, and apparel. The company operates as a single reportable segment with sales channels divided between Direct-to-Consumer (DTC) and Wholesale. In 2025, DTC accounted for 60% of net sales, while Wholesale accounted for 40%. The company is headquartered in Austin, Texas.

Key Financial Metrics

Material Changes vs. Prior Period

• Revenue Growth: Net sales increased 2% ($38.6 million) year-over-year. This was driven by a 4% increase in DTC sales ($1,127.8 million) and a 16% increase in International sales ($394.4 million), partially offset by a 1% decline in U.S. sales and a 1% decline in Drinkware sales.
• Margin Compression: Gross margin decreased 70 basis points to 57.4%. The primary driver was higher tariff costs, which unfavorably impacted gross margin by 230 basis points. This was partially offset by lower product costs (90 bps benefit) and selective price increases (40 bps benefit).
• Expense Increases: Selling, General, and Administrative (SG&A) expenses increased 5% ($41.2 million) to $859.1 million, or 46.0% of net sales (up 130 bps). Increases were due to higher general and administrative expenses (technology and facility investments), employee compensation (stock-based comp and headcount), and marketing.
• Profitability: Operating income decreased 13% to $213.6 million, and Net Income decreased 6% to $165.4 million, reflecting the margin pressure and increased operating expenses.
• Share Repurchases: The company repurchased approximately $297.6 million of common stock in 2025 (8.2 million shares), utilizing a portion of its $450 million authorized program.

Guidance, Outlook, Risks, and Unusual Items

• Tariff Impact and Uncertainty: The company faced significant headwinds from U.S. tariffs implemented in 2025, which increased import costs. While the U.S. Supreme Court invalidated certain tariffs (IEEPA Decision) in February 2026, new tariffs were immediately initiated under alternative authorities. The company notes significant uncertainty regarding the duration, scope, and potential refunds of these tariffs, which could materially affect 2026 results.
• Supply Chain Diversification: To mitigate tariff risks, YETI accelerated the diversification of Drinkware manufacturing outside of China. While successful in shifting capacity, this caused short-term supply chain disruptions and inventory constraints in 2025 that adversely impacted sales.
• Product Recalls: The company continues to manage a voluntary recall initiated in 2023 for certain Hopper soft coolers and SideKick gear cases. The recall reserve was $5.4 million as of January 3, 2026, down from $12.1 million in the prior year. Recall adjustments negatively impacted net sales by $2.3 million in 2025.
• Acquisitions: In Q3 2025, YETI acquired assets related to the Helimix branded shaker bottle for $38.0 million to expand into the sport and wellness category. In Q4 2025, the company launched the Yonder Shaker Bottle leveraging this acquisition.
• Capital Expenditures: For 2026, capital expenditures are expected to be between $60.0 million and $70.0 million, focused on technology, product innovation, and supply chain investments.
• Risks: Key risks include the inability to maintain brand image, failure to forecast demand accurately, supply chain disruptions, geopolitical conflicts affecting trade, and the impact of inflation on discretionary spending.

Investor Verification Checklist

• Tariff Resolution: Verify the status of refund claims related to the IEEPA Decision and the specific impact of newly initiated tariffs on 2026 cost structures.
• Supply Chain Stability: Confirm that the transition of Drinkware manufacturing out of China has stabilized and that inventory constraints are resolved.
• Recall Reserve Adequacy: Monitor the remaining product recall reserve ($5.4 million) to ensure it is sufficient for final settlement of the 2023 Hopper/SideKick recall.
• Share Repurchase Activity: Track the remaining authorization under the $450 million share repurchase program ($152.4 million remaining as of Jan 3, 2026) and execution pace.
• International Growth: Assess the sustainability of the 16% growth in international sales, particularly in new markets like Japan and Europe, against potential currency headwinds.