YETI Holdings Inc
For the period ended Sep 28, 2024. Filed Nov 7, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 28, 2024 · Filed Nov 7, 2024
YETI$44.97-4.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-29; filed 2024-08-08.
0001670592-24-000034
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-28; filed 2024-11-07.
0001670592-24-000041
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 115 previous paragraphs and 119 current paragraphs.
62 unchanged; 47 reworded; 10 added; 6 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 4 previous and 4 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (10)
Current report
During the third quarter of 2024, we expanded our drinkware category with the launch of our new Cast Iron Skillet in three sizes and our new Rambler Pitcher in two sizes as well as the full release of our Flask and Shot Glasses. We also introduced new seasonal colorways.
Current report
•Wholesale channel net sales increased $23.6 million, or 14%, to $197.6 million, compared to $174.1 million in the same period last year, due to growth in both Drinkware and Coolers & Equipment.
Current report
•Coolers & Equipment net sales increased by $21.0 million, or 12%, to $192.6 million, compared to $171.5 million in the same period last year, driven by strong performance in bags, hard coolers, and outdoor living products.
Current report
Gross profit increased $26.5 million, or 11%, to $277.7 million, compared to $251.3 million in the prior year quarter. Gross profit for the three months ended September 30, 2023 included a favorable impact of $0.8 million related to lower than anticipated recall-related costs. Gross margin rate was flat at 58.0% compared to the prior year quarter, primarily due to the following factors:
Current report
•higher customization costs, which unfavorably impacted gross margin by 40 basis points;
Current report
•supplier transition costs and higher material costs related to product transitions, which unfavorably impacted gross margin by 40 basis points;
Current report
•the absence in the current year quarter of a benefit in the prior year quarter associated with our voluntary product recalls, which drove an unfavorable change in gross margin of 20 basis points compared to the prior year quarter; and
Current report
•higher customization costs, which unfavorably impacted gross margin by 40 basis points; and
Current report
Recent Accounting Pronouncements
Current report
For a description of recently issued and adopted accounting pronouncements, including the respective dates of adoption and expected effects on our results of operations and financial condition, see “Recently Adopted Accounting Pronouncements” in Note 1 of the Unaudited Condensed Consolidated Financial Statements.
Removed paragraphs (6)
Previous report
Gross profit increased $49.5 million, or 23%, to $264.3 million, compared to $214.8 million in the prior year quarter. Gross profit for the three months ended July 1, 2023 included an unfavorable impact of $19.4 million related to a recall reserve adjustment. Gross margin rate increased 360 basis points to 57.0% from 53.4% in the prior year quarter. The increase in gross margin was primarily driven by:
Previous report
•the unfavorable impact of a favorable $10.7 million reserve adjustment in the prior year quarter associated with our voluntary product recalls (increasing SG&A as a percent of net sales by 270 basis points).
Previous report
•Wholesale channel net sales increased $54.7 million, or 18%, to $366.7 million, compared to $312.0 million in the same period last year. Wholesale channel net sales included an unfavorable impact of $16.4 million in the first half of 2023 related to a recall reserve adjustment.
Previous report
•Coolers & Equipment net sales increased by $64.9 million, or 25%, to $325.8 million, compared to $261.0 million in the same period last year. Coolers & Equipment net sales included an unfavorable impact of $24.5 million in the first half of 2023 related to a recall reserve adjustment.
Previous report
•the favorable impact of an unfavorable reserve adjustment in the prior year quarter associated with our voluntary product recalls, which favorably impacted gross margin in the current year quarter by 70 basis points;
Previous report
•the unfavorable impact of customization costs, on higher customization sales mix, which unfavorably impacted gross margin by 30 basis points; and
Reworded paragraphs (47)
Previous wording
During the second quarter of 2024, we continued the expansion of our drinkware offerings with the launch of our new Rambler French Press in two sizes, our Flask and Shot Glasses, and new seasonal colorways. We also expanded our hard cooler offerings with two new sizes within our Roadie cooler family.
Current wording
During the second quarter of 2024, we continued the expansion of our drinkware offerings with the launch of our new Rambler French Press in two sizes, the limited release of our Flask and Shot Glasses, and new seasonal colorways. We also expanded our hard cooler offerings with two new sizes within our Roadie cooler family.
Previous wording
There is significant uncertainty regarding how macroeconomic trends, including sustained high levels of inflation and higher interest rates, will impact consumer demand. While some of these conditions have negatively impacted consumer discretionary spending behavior, we continue to see strong overall demand for our products. We have, however, seen instances of consumer sensitivity to higher price points, which has negatively impacted our financial results.
Current wording
There remains significant uncertainty regarding how macroeconomic conditions, including sustained high levels of inflation and higher interest rates, will impact consumer demand. While some of these conditions have negatively impacted consumer discretionary spending behavior, we continue to see strong overall demand for our products. We have, however, seen instances of consumer sensitivity to higher price points, which has negatively impacted our financial results.
Previous wording
The recent disruptions of container shipping traffic through the Red Sea and surrounding waterways have continued to negatively affect transit times and freight costs for goods manufactured in Asia and destined to Europe, and to a smaller extent the Americas. In addition to these ongoing disruptions, freight rates increased industry-wide towards the end of the second quarter of 2024. Although such effects have not materially impacted our business to date, the continuation or worsening of these conditions may materially impact our operations and financial results through the remainder of 2024.
Current wording
The recent disruptions of container shipping traffic through the Red Sea and surrounding waterways have continued to negatively affect transit times and freight costs for goods manufactured in Asia and destined to Europe, and to a smaller extent the Americas. In addition to these ongoing disruptions, freight rates have remained elevated industry-wide since their increase in the second quarter of 2024. Although such effects have not materially impacted our business to date, the continuation or worsening of these conditions may materially impact our operations and financial results through the remainder of 2024.
Previous wording
As a result of the net unfavorable recall reserve adjustment and other incurred costs, for the three and six months ended July 1, 2023, we recorded a reduction to net sales of $24.5 million primarily related to higher estimated future recall-related gift card elections; recorded a benefit in cost of goods sold of $5.1 million and $6.3 million, respectively, primarily related to lower estimated costs of future product replacement remedy elections and logistics costs, and lower recall-related costs; and recorded a benefit in SG&A expenses primarily related to lower estimated other recall-related costs of $10.7 million and $10.5 million, respectively. The total unfavorable impact to operating income related to the recalls was $8.7 million and $7.7 million for the three and six months ended July 1, 2023, respectively.
Current wording
For the three months ended September 30, 2023, we recorded an immaterial reduction to net sales primarily related to higher recall-related returns, and recorded a benefit in cost of goods sold of $0.8 million, primarily related to lower estimated recall-related costs. For the nine months ended September 30, 2023, we recorded a $24.5 million reduction to net sales primarily related to higher estimated future recall-related gift card elections; recorded a benefit in cost of goods sold of $7.1 million, primarily related to lower estimated costs of future product replacement remedy elections and logistics costs and lower recall-related costs; and recorded a benefit in SG&A expenses primarily related to lower estimated other recall-related costs of $10.5 million. The total impact to operating income related to the recalls was a favorable impact of $0.8 million and an unfavorable impact of $6.8 million for the three and nine months ended September 30, 2023, respectively.
Previous wording
During 2024, we have not recorded any adjustments to our recall reserves. As a result, the product recall had no impact to our consolidated financial results for the three and six months ended June 29, 2024.
Current wording
During 2024, we have not recorded any adjustments to our recall reserves. As a result, the product recall had no impact to our consolidated financial results for the three and nine months ended September 28, 2024.
Previous wording
Fiscal Year. We have a 52- or 53-week fiscal year that ends on the Saturday closest in proximity to December 31, such that each quarterly period will be 13 weeks in length, except during a 53-week year when the fourth quarter will be 14 weeks. Our fiscal year ending December 28, 2024 (“2024”) is a 52-week period. The first quarter of our fiscal year 2024 ended on March 30, 2024, the second quarter ended on June 29, 2024, and the third quarter ends on September 28, 2024. Our fiscal year ended December 30, 2023 (“2023”) was also a 52-week period. Unless otherwise stated, references to particular years, quarters, months and periods refer to our fiscal years and the associated quarters, months, and periods of those fiscal years. The unaudited condensed consolidated financial results presented herein represent the three and six months ended June 29, 2024 and July 1, 2023.
Current wording
Fiscal Year. We have a 52- or 53-week fiscal year that ends on the Saturday closest in proximity to December 31, such that each quarterly period will be 13 weeks in length, except during a 53-week year when the fourth quarter will be 14 weeks. Our fiscal year ending December 28, 2024 (“2024”) is a 52-week period. The first quarter of our fiscal year 2024 ended on March 30, 2024, the second quarter ended on June 29, 2024, and the third quarter ended on September 28, 2024. Our fiscal year ended December 30, 2023 (“2023”) was also a 52-week period. Unless otherwise stated, references to particular years, quarters, months and periods refer to our fiscal years and the associated quarters, months, and periods of those fiscal years. The unaudited condensed consolidated financial results presented herein represent the three and nine months ended September 28, 2024 and September 30, 2023.
Previous wording
Net sales increased $60.9 million, or 15%, to $463.5 million for the three months ended June 29, 2024, compared to the three months ended July 1, 2023. Net sales for the three months ended July 1, 2023 included an unfavorable impact of $24.5 million related to a recall reserve adjustment. Excluding the recall-related impact from the second quarter of 2023, net sales increased $36.4 million, or 9%, due to growth in both our Wholesale and DTC channels. Net sales for the second quarter of 2024 and 2023 also include $2.3 million and $12.5 million, respectively, of sales related to gift card redemptions in connection with recall remedies.
Current wording
Net sales increased $44.9 million, or 10%, to $478.4 million for the three months ended September 28, 2024, compared to $433.6 million for the three months ended September 30, 2023. Net sales for the third quarter of 2024 and 2023 also include $2.7 million and $6.3 million, respectively, of sales related to gift card redemptions in connection with recall remedies.
Previous wording
•DTC channel net sales increased $24.0 million, or 11%, to $250.4 million, compared to $226.4 million in the prior year quarter, due to growth in both Coolers & Equipment and Drinkware. DTC channel net sales included an unfavorable impact of $8.1 million in the second quarter of 2023 related to a recall reserve adjustment. DTC channel mix was 54% in the second quarter of 2024 compared to 56% in the second quarter of 2023.
Current wording
•DTC channel net sales increased $21.3 million, or 8%, to $280.8 million, compared to $259.5 million in the prior year quarter, due to growth in both Coolers & Equipment and Drinkware. DTC channel mix was 59% in the third quarter of 2024 compared to 60% in the third quarter of 2023.
Previous wording
•Drinkware net sales increased by $13.1 million, or 6%, to $246.5 million, compared to $233.4 million in the prior year quarter, driven by the continued expansion and innovation of our Drinkware product offerings and new seasonal colorways.
Current wording
•Drinkware net sales increased by $21.7 million, or 9%, to $275.0 million, compared to $253.3 million in the prior year quarter, driven by the continued expansion and innovation of our Drinkware product offerings and new seasonal colorways.
Previous wording
Net sales in the U.S. increased $41.0 million, or 12%, to $386.9 million for the three months ended June 29, 2024. Net sales in international locations increased $19.9 million, or 35%, to $76.6 million for the three months ended June 29, 2024. For the three months ended July 1, 2023, net sales in the U.S. and international locations included an unfavorable impact of $23.9 million and $0.6 million, respectively, related to a recall reserve adjustment. Net sales in international locations represented 17% and 14% of total net sales in the second quarter of 2024 and 2023, respectively.
Current wording
Net sales in the U.S. increased $24.5 million, or 7%, to $390.2 million for the three months ended September 28, 2024. Net sales in international locations increased $20.4 million, or 30%, to $88.3 million for the three months ended September 28, 2024. Net sales in international locations represented 18% and 16% of total net sales in the third quarter of 2024 and 2023, respectively.
Previous wording
•lower inbound freight rates, which favorably impacted gross margin by 340 basis points;
Current wording
•lower inbound freight rates, which favorably impacted gross margin by 160 basis points; and
Previous wording
•lower product costs, which favorably impacted gross margin by 90 basis points;
Current wording
•lower product costs, which favorably impacted gross margin by 80 basis points;
Previous wording
•the unfavorable impact of strategic price decreases on certain hard cooler products implemented during the first quarter of 2024, which unfavorably impacted gross margin by 50 basis points; and
Current wording
•strategic price decreases on certain hard cooler products implemented during the first quarter of 2024, which unfavorably impacted gross margin by 30 basis points;
Previous wording
•the unfavorable impact of the amortization of inventory fair value step-up in connection with the Mystery Ranch acquisition, which unfavorably impacted gross margin by 70 basis points;
Current wording
•the amortization of inventory fair value step-up in connection with the Mystery Ranch acquisition, which unfavorably impacted gross margin by 20 basis points;
Previous wording
•other impacts, which unfavorably impacted gross margin by 60 basis points.
Current wording
•other impacts, which unfavorably impacted gross margin by 90 basis points.
Previous wording
SG&A expenses increased $32.4 million, or 20%, to $196.9 million for the three months ended June 29, 2024, compared to $164.5 million for the three months ended July 1, 2023. As a percentage of net sales, SG&A expenses increased 160 basis points to 42.5% for the three months ended June 29, 2024 from 40.9% for the three months ended July 1, 2023. The increase in SG&A expenses was primarily driven by:
Current wording
SG&A expenses increased $18.7 million, or 10%, to $208.1 million for the three months ended September 28, 2024, compared to $189.4 million for the three months ended September 30, 2023. As a percentage of net sales, SG&A expenses decreased 20 basis points to 43.5% for the three months ended September 28, 2024 from 43.7% for the three months ended September 30, 2023. The decrease in SG&A expenses was primarily driven by:
Previous wording
•an increase in variable expenses of $13.0 million (decreasing SG&A as a percent of net sales by 10 basis points) primarily associated with higher net sales, and comprised of higher distribution costs, including higher third-party logistics fees, online marketplace fees, and outbound freight rates;
Current wording
•an increase in variable expenses of $0.8 million (decreasing SG&A as a percent of net sales by 130 basis points) primarily associated with higher net sales, and comprised of higher distribution costs including higher third-party logistics fees and online marketplace fees, partially offset by lower outbound freight; and
Previous wording
•an increase in non-variable expenses of $14.1 million (decreasing SG&A as a percent of net sales by 90 basis points) comprised of higher employee costs, mainly due to investments in headcount to support future growth and non-cash stock-based compensation expense, investments in marketing expenses and higher information technology expenses; and
Current wording
•an increase in non-variable expenses of $17.9 million (increasing SG&A as a percent of net sales by 110 basis points) comprised of higher employee costs, mainly due to investments in headcount to support future growth, and investments in marketing expenses, partially offset by asset impairments in the prior year.
Previous wording
Interest expense, net was $0.5 million for the three months ended June 29, 2024, compared to $0.7 million for the three months ended July 1, 2023, primarily due to an increase in interest income.
Current wording
Interest income, net was $0.4 million for the three months ended September 28, 2024. Interest expense, net was $0.3 million for the three months ended September 30, 2023. The change versus the prior year quarter was primarily due to an increase in interest income.
Previous wording
Other expense was $3.7 million for the six months ended June 29, 2024, compared to other income of $1.3 million for the six months ended July 1, 2023. The change in other expense was primarily due to foreign currency losses on intercompany balances for the six months ended June 29, 2024 versus foreign currency gains on intercompany balances for the six months ended July 1, 2023.
Current wording
Other income was $4.1 million for the three months ended September 28, 2024, compared to other expense of $4.0 million for the three months ended September 30, 2023. The change versus the prior year quarter was primarily due to foreign currency gains on intercompany balances for the three months ended September 28, 2024 versus foreign currency losses on intercompany balances for the three months ended September 30, 2023.
Previous wording
Income tax expense was $16.9 million for the three months ended June 29, 2024, compared to $12.8 million for the three months ended July 1, 2023. The increase in income tax expense was due to higher income before income taxes. The effective tax rate was 25% for each of the three months ended June 29, 2024 and July 1, 2023.
Current wording
Income tax expense was $17.8 million for the three months ended September 28, 2024, compared to $14.9 million for the three months ended September 30, 2023. The increase in income tax expense was primarily due to higher income before income taxes. The effective tax rate was 24% for the three months ended September 28, 2024, compared to 26% for the three months ended September 30, 2023. The decrease in the effective tax rate was primarily due to a discrete tax expense related to a change in the estimate for an uncertain tax position in the three months ended September 30, 2023.
Previous wording
Six Months Ended June 29, 2024 Compared to July 1, 2023
Current wording
Nine Months Ended September 28, 2024 Compared to September 30, 2023
Previous wording
Net sales increased $99.5 million, or 14%, to $804.9 million for the six months ended June 29, 2024, compared to $705.4 million for the six months ended July 1, 2023. Net sales for the six months ended July 1, 2023 included an unfavorable impact of $24.5 million related to a recall reserve adjustment. Excluding this recall-related reserve impact from the first half of 2023, net sales increased $75.0 million, or 10%, due to growth in both our Wholesale and DTC channels. Net sales for the six months ended June 29, 2024 and July 1, 2023 include $4.3 million and $12.5 million, respectively, of sales related to gift card redemptions in connection with recall remedies.
Current wording
Net sales increased $144.4 million, or 13%, to $1,283.3 million for the nine months ended September 28, 2024, compared to $1,138.9 million for the nine months ended September 30, 2023. Net sales for the nine months ended September 30, 2023 included an unfavorable impact of $24.5 million related to a recall reserve adjustment. Excluding this recall-related reserve impact from the first nine months of 2023, net sales increased $119.9 million, or 10%, due to growth in both our Wholesale and DTC channels. Net sales for the nine months ended September 28, 2024 and September 30, 2023 include $7.1 million and $18.8 million, respectively, of sales related to gift card redemptions in connection with recall remedies.
Previous wording
•DTC channel net sales increased $44.8 million, or 11%, to $438.2 million, compared to $393.4 million in the prior year period, due to growth in both Coolers & Equipment and Drinkware. DTC channel net sales included an unfavorable impact of $8.1 million in the first half of 2023 related to a recall reserve adjustment. DTC channel mix was 54% in the first six months of 2024 compared to 56% in the first six months of 2023.
Current wording
•DTC channel net sales increased $66.2 million, or 10%, to $719.0 million, compared to $652.9 million in the prior year period, due to growth in both Coolers & Equipment and Drinkware. DTC channel net sales included an unfavorable impact of $8.1 million in the first nine months of 2023 related to a recall reserve adjustment. DTC channel mix was 56% in the first nine months of 2024 compared to 57% in the first nine months of 2023.
Previous wording
•Wholesale channel net sales increased $37.0 million, or 21%, to $213.1 million, compared to $176.2 million in the same period last year, due to growth in both Coolers & Equipment and Drinkware. Wholesale channel net sales included an unfavorable impact of $16.4 million in the second quarter of 2023 related to a recall reserve adjustment.
Current wording
•Wholesale channel net sales increased $78.3 million, or 16%, to $564.3 million, compared to $486.1 million in the same period last year, due to growth in both Drinkware and Coolers & Equipment. Wholesale channel net sales included an unfavorable impact of $16.4 million in the first nine months of 2023 related to a recall reserve adjustment.
Previous wording
•Drinkware net sales increased by $37.4 million, or 9%, to $461.1 million, compared to $423.7 million in the prior year period, driven by the continued expansion and innovation of our Drinkware product offerings and new seasonal colorways.
Current wording
•Drinkware net sales increased by $59.1 million, or 9%, to $736.1 million, compared to $677.0 million in the prior year period, driven by the continued expansion and innovation of our Drinkware product offerings and new seasonal colorways.
Previous wording
•Coolers & Equipment net sales increased by $49.3 million, or 31%, to $205.9 million, compared to $156.6 million in the same period last year, driven by strong performance in soft coolers and bags. Coolers & Equipment net sales included an unfavorable impact of $24.5 million in the second quarter of 2023 related to a recall reserve adjustment.
Current wording
•Coolers & Equipment net sales increased by $85.9 million, or 20%, to $518.4 million, compared to $432.5 million in the same period last year driven by strong performance in bags and soft coolers. Coolers & Equipment net sales included an unfavorable impact of $24.5 million in the first nine months of 2023 related to a recall reserve adjustment.
Previous wording
Net sales in the U.S. increased $63.8 million, or 11%, to $662.7 million for the six months ended June 29, 2024. Net sales in international locations increased $35.7 million, or 34%, to $142.2 million for the six months ended June 29, 2024. For the six months ended July 1, 2023, net sales in the U.S. and international locations included an unfavorable impact of $23.9 million and $0.6 million, respectively, related to a recall reserve adjustment. Net sales in international locations represented 18% and 15% of total net sales in first six months of 2024 and 2023, respectively.
Current wording
Net sales in the U.S. increased $88.3 million, or 9%, to $1,052.9 million for the nine months ended September 28, 2024. Net sales in international locations increased $56.1 million or 32%, to $230.5 million for the nine months ended September 28, 2024. For the nine months ended September 30, 2023, net sales in the U.S. and international locations included an unfavorable impact of $23.9 million and $0.6 million, respectively, related to a recall reserve adjustment. Net sales in international locations represented 18% and 15% of total net sales in the first nine months of 2024 and 2023, respectively.
Previous wording
Gross profit increased $82.4 million, or 22%, to $459.1 million compared to $376.7 million in the prior year period. Gross profit for the six months ended July 1, 2023 included an unfavorable impact of $18.2 million related to a recall reserve adjustment. Gross margin rate increased 360 basis points to 57.0% from 53.4% in the same period last year. The increase in gross margin was primarily driven by:
Current wording
Gross profit increased $108.9 million, or 17%, to $736.8 million compared to $628.0 million in the prior year period. Gross profit for the nine months ended September 30, 2023 included an unfavorable impact of $17.4 million related to a recall reserve adjustment. Gross margin rate increased 230 basis points to 57.4% from 55.1% in the same period last year. The increase in gross margin was primarily driven by:
Previous wording
•lower inbound freight rates, which favorably impacted gross margin by 320 basis points;
Current wording
•lower inbound freight rates, which favorably impacted gross margin by 280 basis points;
Previous wording
•lower product costs, which favorably impacted gross margin by 140 basis points; and
Current wording
•lower product costs, which favorably impacted gross margin by 110 basis points; and
Previous wording
•the favorable impact of an unfavorable reserve adjustment in the prior year quarter associated with our voluntary product recalls, which favorably impacted gross margin in the current year quarter by 150 basis points;
Current wording
•the absence in the current year period of an unfavorable reserve adjustment in the prior year period associated with our voluntary product recalls, which drove a favorable change in gross margin of 40 basis points compared to the prior year period;
Previous wording
•the unfavorable impact of the amortization of inventory fair value step-up in connection with the Mystery Ranch acquisition, which unfavorably impacted gross margin by 60 basis points;
Current wording
•the amortization of inventory fair value step-up in connection with the Mystery Ranch acquisition, which unfavorably impacted gross margin by 40 basis points;
Previous wording
•the unfavorable impact of strategic price decreases on certain hard cooler products implemented during the first quarter of 2024, which unfavorably impacted gross margin by 40 basis points;
Current wording
•strategic price decreases on certain hard cooler products implemented during the first quarter of 2024, which unfavorably impacted gross margin by 40 basis points;
Previous wording
SG&A expenses increased by $54.6 million, or 18%, to $365.9 million for the six months ended June 29, 2024 compared to $311.3 million for the six months ended July 1, 2023. As a percentage of net sales, SG&A expenses increased by 140 basis points to 45.5% for the six months ended June 29, 2024 compared to 44.1% for the six months ended July 1, 2023. The increase in SG&A expenses was primarily driven by:
Current wording
SG&A expenses increased by $73.3 million, or 15%, to $574.0 million for the nine months ended September 28, 2024 compared to $500.7 million for the nine months ended September 30, 2023. As a percentage of net sales, SG&A expenses increased by 70 basis points to 44.7% for the nine months ended September 28, 2024 compared to 44.0% for the nine months ended September 30, 2023. The increase in SG&A expenses was primarily driven by:
Previous wording
•an increase in variable expenses of $7.6 million (decreasing SG&A as a percent of net sales by 20 basis points) primarily associated with higher net sales, and comprised of higher distribution costs including higher third-party logistics fees, online marketplace fees, and outbound freight rates;
Current wording
•an increase in variable expenses of $13.9 million (decreasing SG&A as a percent of net sales by 60 basis points) primarily associated with higher net sales, and comprised of higher distribution costs, including higher third-party logistics fees and online marketplace fees;
Previous wording
•an increase in non-variable expenses of $31.1 million (no impact on SG&A as a percent of net sales) comprised of higher employee costs, mainly due to investments in headcount to support future growth and non-cash stock-based compensation expense, investments in marketing expenses, higher information technology expenses, and asset impairments, partially offset by lower warehousing costs; and
Current wording
•an increase in non-variable expenses of $48.9 million (increasing SG&A as a percent of net sales by 40 basis points) comprised of higher employee costs, mainly due to investments in headcount to support future growth and non-cash stock-based compensation expense, investments in marketing expenses, higher information technology expenses, and asset impairments, partially offset by lower warehousing costs; and
Previous wording
•the unfavorable impact of a favorable $10.5 million reserve adjustment in the prior year period associated with our voluntary product recalls (increasing SG&A as a percent of net sales by 150 basis points).
Current wording
•the absence in the current year period of a favorable $10.5 million reserve adjustment in the prior year period associated with our voluntary product recalls, increased SG&A as a percent of net sales by 90 basis points compared to the prior year period.
Previous wording
Interest income, net was $0.1 million for the six months ended June 29, 2024, compared to income expense, net of $1.3 million for the six months ended July 1, 2023, primarily due to an increase in interest income.
Current wording
Interest income, net was $0.5 million for the nine months ended September 28, 2024. Interest expense, net was $1.6 million for the nine months ended September 30, 2023. The change versus the prior year period was primarily due to an increase in interest income.
Previous wording
Other income was $0.4 million for the three months ended June 29, 2024, compared to other income of $1.2 million for the three months ended July 1, 2023. The decrease was primarily due to lower foreign currency gains on intercompany balances.
Current wording
Other income was $0.4 million for the nine months ended September 28, 2024, compared to other expense of $2.8 million for the nine months ended September 30, 2023. The change versus the prior year period was primarily due to foreign currency gains on intercompany balances for the nine months ended September 28, 2024 versus foreign currency losses on intercompany balances for the nine months ended September 30, 2023.
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