Editor's Note: Below is a brief excerpt from a complimentary research note written by our Retail analysts Brian McGough and Jeremy McLean. Click HERE for further in-depth retail research included in Retail Pro.
This YETI miss is a pivotal event for this company. It’s done nothing but beat and guide up since the IPO, and carried a cult-like stratospheric multiple accordingly. It’s had minor bumps and bruises from supply chain – but the brand always checked out and was on fire.
Well that all changed today.
Yes, freight still hurting, but the company noted that the business mix change is hurting both top line and margins. Missed the quarter by a nickel, and took down the year by ~$0.50. That’s a thesis killer for any bull.
We first went short this name early last year at $68. While it initially went against us, it’s been a big alpha generator this year.
Ultimately, this is a consumer durable in a category with low barriers to entry, and deserving of a single digit EBITDA Multiple – well below the 12x it has today and the massive 20x+ multiple when we first went short.
The stock is selling off on this miss, but we’re sticking with it short-side.