YETI 10-K & 10-Q changes, risk factors and insider trading

Our business depends on maintaining and strengthening our brand to attract new customers and generategenerating and maintainmaintaining ongoing demand for our products, and a significant reduction in such demand could harm our results of operations.

The YETI name and premium brand image are integral to the growth of our business, as well as to the implementation of our strategies for expanding our business. Our success depends on the value and reputation of our brand, which is rooted in passion for the outdoors. To sustain long-term growth, we must continue to successfully promote our products to consumers who align with the values of our brand, as well as to individuals who simply value products of uncompromising quality and design. Our ability to execute our marketing and growth strategy depends on many factors, such as the quality, design, performance, functionality, and durability of our products,products; the image and reputation of our e-commerce platform,platform; the design of our retail partnerfloor spaces and our wholesale partners’ floor spaces,spaces; the impact of our communication activities, including advertising, social media, and public relations,relations; and our management of the customer experience, including direct interfaces through customer service. Maintaining, promoting, and positioning our brand are important to expanding our customer base and will depend largely on the success of our marketing and merchandising efforts and our ability to provide consistent, high-quality customer experiences.

We have made, and we expect that we will continue to make, significant investments in promoting our products and attracting new customers, including through the use of corporate and sports league partnerships, YETI Ambassadors, traditional, digital, and social media, original YETI films, and participation in, and sponsorship of, community events. Marketing campaigns can be expensive and may not result in the cost-effective acquisition of customers. Ineffective marketing, ongoing and sustained promotional activities, negative publicity, product diversion to unauthorized distribution channels, product or manufacturing defects, product recalls, counterfeit products, unfair labor practices, and failure to protect the intellectual property rights in our brand are some of the potential threats to the strength of our brand, and those and other factors could rapidly and severely diminish customer confidence in us. Furthermore, these factors could cause our customers to lose the personal connection they feel with the YETI brand. The rapid diffusion of information through social media also heightens the risk that negative publicity—whether accurate or not—regarding product performance, Ambassador conduct, company policies or sourcing practices could quickly erode brand equity. Actions taken by individuals thator weorganizations partnerassociated with, such aswith YETI ambassadors,(including Ambassadors and influencers or our associates,) that failare to represent our brand in a manner consistentinconsistent with our brand image,values, whether throughon our social media platforms or their own,theirs, could also harm our brand reputation and materially impact our business. Further, asnow that our brand becomesis more widely known,known in our established markets, future marketing campaigns may not attract new customers at the same rate as past campaigns. Inflation orInflation, higher product costs or other macroeconomic factors may also affect our ability to provide products in a cost-effective manner and hinder us from attracting new customers. If we are unable to attract new customers, fail to attract new customers in a cost-effective manner, or fail to drive awareness of our full product portfolio among new and existing customers, our growth could be slower than we expectexpect, and our business could be harmed.

The market for products in the outdoor and recreationour products industry is characterized by new product introductions, frequent enhancementsenhancements, tocustomization options, new colorways for existing products, and changing customer demands, needs and preferences. This is emphasized by the fact that our products are high-quality, durable, and do not have a natural replacement cycle. Shorter innovation cycles and the growing influence of social-media reviews further increase the risk that new products will not achieve anticipated acceptance or that our intellectual-property safeguards will be circumvented. To maintain and increase sales, we must continue to introduce new products and improve or enhance our existing products on a timely basis to respond to new and evolving consumer preferences. The success of our new and enhanced products depends on many factors, including anticipating consumer preferences, finding innovative solutions to consumer problems, differentiating our products from those of our competitors, and maintaining the strength of our brand.brand, onboarding new manufacturing processes and suppliers, and successful product lifecycle management. The design and development of our products is costly, and we typically have several products in development at the same time. Problems in the designDesign or quality of our products,issues, or delays in productlaunching introduction,new mayproducts, harmcould damage our brand, disrupt our business, and negatively affect our financial condition,condition and results of operations. Any new products that we develop and market may not generate sufficient revenues to recoup their development, production, marketing, selling and other costs.

To ensure adequate inventory supply, we must forecast inventory needs and place orders with our manufacturers before firm orders are placed by our customers. Forecasts are particularly challenging as we expand into new markets and geographies, develop and market new products, and face macroeconomic uncertainties, including related to consumer discretionary spending, interest rates, inflation, tariffs and geopolitical events. Our historical sales, expense levels, and profitability may not be an appropriate basis for forecasting future results. If we fail to accurately forecast customer demand, including relating to our expected growth, we may experience excess inventory levels or a shortage of productproducts to deliver to our customers. Failure to accurately forecast our results of operations and growth rate could also cause us to make poor operating decisionsdecisions, and we may not be able to adjust in a timely manner. Consequently, actual results could be materially lower than anticipated. Even if the markets in which we compete expand, we cannot assure you that our business will grow at similar rates, or at all.

Factors that could affect our ability to accurately forecast demand for our products include: (a) an increase or decrease in consumer demand for our products; (b) our failure to accurately forecastpredict consumer acceptance for our new products; (c) product introductions by competitors; (d) unanticipated changes in general market conditions or other factors, which may result in cancellations of advance orders or a reduction or increase in the rate of reorders or at-once orders placed by retailers; (e) impacts on consumer demand due to unseasonable weather conditions; (f) weakening economic conditions or consumer confidence in future economic conditions, as well as inflationary conditions or tariffs resulting in rising prices, which could each reduce demand for discretionary items, such as our products; and (g) terrorism or acts of war, or the threat thereof, or political or labor instability or unrest, riots, or public health crises, or geopolitical conflicts, which could adversely affect consumer confidence and spending or interrupt production and distribution of product and raw materials.

Inventory levels in excess of customer demand may result in inventory write-downs or write-offs and the sale of excess inventory at discounted prices or in less preferred distribution channels, which could impair our brand image and harm our gross margin.margins. In addition, if we underestimate the demand for our products, our manufacturers may not be able to produce products to meet our customer requirements, and this could result in delays in the shipment of our products, lower sales, higher costs, as well as damage to our reputation and retailer and distributor relationships.

As we grow our business, slower growing or reduced demand for our products, increased competition, a highly promotional environment, a decrease in the growth rate of our overall market, failure to develop and successfully market new products, or the maturation of our business or market could harm our business. We have made and expect to continue to make significant investments in our business.business, Weincluding planin toparticular continue to expandexpanding our operations and infrastructure both domestically and internationally. We also intend to continue to design, develop, and market new products and make enhancements to our existing products. If our sales do not increase at a sufficient rate to offset these increases in our operating expenses, our profitability may decline in future periods.

We believe that our future growth depends not only on continuing to reach our existing retail partners and customers,customers but also on continuing to broaden our retail partner and customer base. The growth of our business will depend, in part, on our ability to continue to expand our retail partner and customer bases in the United States, as well as in international markets, including Canada, Australia, Europe, and Asia. In these international markets, we face challenges that are at times different from those we encounter in the United States, including competitive, merchandising, distribution, hiring, and other difficulties. We may also encounter difficulties in attracting customers due to a lack of consumer familiarity withwith, or acceptance ofof, our brand, or a resistance to paying for premium products, particularly in international markets. We continue to evaluate and invest in sales and marketing efforts and other strategies to expand the customer base for our products.products, In addition, althoughbut we aremay investing in sales and marketing activities to further penetrate newer regions, including expansion of our dedicated sales force, we cannot assure you that we willnot be successful. If we are not successful, our business and results of operations may be harmed.

The markets in which we compete are highly competitive, with low barriers to entry. Numerous other brands and retailers offer a wide variety of products that compete with our products, including coolers, drinkware, cookware, bags, and cargo. Competition in these product markets is based on a number of factors, including product quality, performance, durability, styling, brand image and recognition, and price. Our competitors may be able to develop and market higher quality products that compete with our products, sell their products for lower prices, use more promotions, adapt to changes in consumers’ needs and preferences more quickly, devote greater resources to the design, sourcing, distribution, marketing, and sale of their products, or generate greater brand recognition than us. In addition, as we expand into new product categories, we have faced, and will continue to face, different and, in some cases, more formidable competition. We believe many of our competitors and potential competitors have significant competitive advantages, including longer operating histories, ability to leverage their sales efforts and marketing expenditures across a broader portfolio of products, more mature global product distribution, larger and broader basebases of retail partners, more established relationships with a larger number of suppliers and manufacturing partners, greater brand recognition, larger or more effective brand ambassador and endorsement relationships, greater financial strength, larger research and development teams, larger marketing budgets, and more distribution and other resources than we do. Some of our competitors may aggressively discount their products or offer other attractive sales terms in order to gain market share, which could result in pricing pressures, reduced profit margins, or lost market share. For example, if our retail partners were to demand higher discounts, we may be forced to lower our gross margins on products sold through such partners. The competitive landscape is challenging in the United States and the growth of our business in international markets may not offset any slower growth in the United States. If we are not able to overcome these potential competitive challenges, effectively market our current and future products, and otherwise compete effectively against our current or potential competitors, our prospects, results of operations, and financial condition could be harmed.

In addition, our customers have become increasingly technologically savvy and expect a seamless omni-channel experience regardless of whether they are shopping in stores or online. Innovation by existing or new competitors could alter the competitive landscape by improving the customer experience and heightening customer expectations or by transforming other aspects of their business through new technologies, such as artificial intelligence (“AI”).AI. If we are unable to develop and continuously improve our technologies, the efforts of which typically require significant capital investments, we may not be able to provide a convenient and consistent experience to our customers, which could negatively affect our ability to compete with other retailers and could result in diminished loyalty to our brands, which could adversely impact our business.

As our business continues to expand, ourOur competitors have imitated or attempted to imitate, and will likely continue to imitate or attempt to imitate, our product designs and branding, which could harm our business and results of operations. Only a portion of the intellectual property used in the manufacture and design of our products is patented, and we therefore rely significantly on trade secrets, trade and service marks, trade dress, and the strength of our brand. We regard our patents, trade dress, trademarks, copyrights, trade secrets, and similar proprietary rights as critical to our success. We also rely on trade secret protection and confidentiality agreements with our employees, consultants, suppliers, manufacturers, and others to protect our proprietary rights. Nevertheless, the steps we take to protect our proprietary rights against infringement or other violation may be inadequate, and we may experience difficulty in effectively limiting the unauthorized use of our patents, trademarks, trade dress, and other intellectual property and proprietary rights worldwide. We also cannot guarantee that others will not independently develop technology with the same or similar function to any proprietary technology we rely on to conduct our business and differentiate ourselves from our competitors. Because a significant portion of our products are manufactured overseas in countries where counterfeiting is more prevalent, and we intend to increase our sales overseas over the long term, we may experience increased counterfeiting of our products. Furthermore, advances in generative AI and other digital technologies may enable the creation of highly convincing counterfeit products, fake listings, and sophisticated schemes on online marketplaces and social media platforms, increasing the difficulty and cost of enforcement. Unauthorized use or invalidation of our patents, trademarks, copyrights, trade dress, trade secrets, or other intellectual property or proprietary rights may cause significant damage to our brand and harm our results of operations.

While we actively develop and protect our intellectual property rights, there can be no assurance that we will be adequately protected in all countries in which we conduct our business or that we will prevail when defending our patent, trademark, and proprietary rights. Additionally, we could incur significant costs and management distraction in pursuing claims to enforce our intellectual property rights through litigation and defending any alleged counterclaims. Our opportunities for obtaining and enforcing intellectual property rights may change because of changes in laws in the United States and other jurisdictions. If we are unable to protect or preserve the value of our patents, trade dress, trademarks, copyrights, or other intellectual property rights for any reason, or if we fail to maintain our brand image due to actual or perceived product or service quality issues, adverse publicity, governmental investigations or litigation, or other reasons, our brand and reputation could be damaged, and our business may be harmed.

The capacity of our manufacturers to produce our products is also dependent upon the availability of raw materials.materials, including rare earth minerals. Our manufacturers may not be able to obtain sufficient supply of raw materials, which could result in delays in deliveries of our products by our manufacturers or increased costs. Any shortage of raw materials or inability of a manufacturer to produce or ship our products in a timely manner, or at all, could impair our ability to ship orders of our products in a cost-efficient, timely manner and could cause us to miss the delivery requirements of our customers. As a result, we could experience cancellations of orders, refusals to accept deliveries, or reductions in our prices and margins, any of which could harm our financial performance, reputation, and results of operations.

We import our products,products and rely on the timely and free flow of goods through open and operational ports from our suppliers and manufacturers. Accordingly, we are subject to certain risks, including labor disputes, union organizing activity, inclement weather, public health crises, and increased transportation costs,risks associated with our third-party contract manufacturers’ and carriers’ ability to provide products and services to meet our requirements.requirements, including labor disputes, union organizing activity, inclement weather, public health crises, and increased transportation costs. Such events could result in delayed or canceled orders by customers, unanticipated inventory accumulation or shortages, and harm to our business, results of operations, and financial condition. We are also vulnerable to risks associated with products manufactured abroad, including, among other things: (a) risks of damage, destruction, or confiscation of products while in transit to our distribution centers; and (b) transportation and other delays in shipments, including as a result of heightened security screening, port congestion, container and labor shortages, and inspection processes or other port-of-entry limitations or restrictions. Global events may also impact the import of our products. For example, in response to ongoing geopolitical conflicts, certain governments have, and may again in the future, implement sanctions, seizures of assets, or export control measures, which could result in higher costs, inventory shortages, or both. In addition, geopolitical conflicts near key global shipping areas may disrupt shipping routes, causing delays and increased freight costs. Although we have continued to experience such effects with respect to the ongoing conflict in the Red Sea, such effects have not materially impacted our business to date.

We are exposed to risk due to our relative concentration of business activity with certain third-party contract manufacturers of our products. For coolers & equipment products, our two largest manufacturers comprised approximately 36% of our production volume during 2024. For drinkware products, our two largest manufacturers comprised approximately 74% of our production volume during 2024. As a result of this concentration in our supply chain, ourOur business and operations would be negatively affected if any of our key manufacturers were to experience significant disruption affecting the price, quality, availability, or timely delivery of products. Our manufacturers could also be acquired by our competitors and may become our direct competitors, thus limiting or eliminating our access to manufacturing capacity. The partial or complete loss of our key manufacturers, or a significant adverse change in our relationship with any of these manufacturers, could result in lost sales, added costs, and distribution delays that could harm our business and customer relationships.

Our business could be harmed if we fail to execute our internal plans to transitioncontinue expanding our supply chainchain, technology and certain other business processes to a large global scale.

We continually assess, and re-engineer as needed, our supply chain management, technology, and business processes to support our expanding scale. Our global expansion toplans a global scale requiresrequire significant investment of capital and human resources, the adaptation and evolution of many business processes and technology, and the attention of many managers and other employees who would otherwise be focused on other aspects of our business. In particular, inadequate implementation of new technology or execution of modifications or upgrades to existing technology, or poor organizational change management could harm ongoing business operations or impede new business capabilities. While executing on such technology initiatives, we need to manage key business functions globally with platforms and process at scale; ensure responsiveness, resiliency and business continuity; adopt emerging technologies; and maintain readiness to withstand and recover from cybersecurity and information technology threats. If our globalization efforts fail to produce planned efficiencies, or are not managed effectively, we may experience excess inventories, inventory shortage, late deliveries, lost sales, or increased costs. Any business disruption arising from our globalization efforts, or our failure to effectively execute our internalglobal plansexpansion to expand globally,plans, could harm our results of operations and financial condition.

The price and availability of key components used to manufacture our products, including polyethylene, polyurethane foam, stainless-steel, polyester fabric, zippers, and other plastic materials and coatings, as well as manufacturing equipment and molds, may fluctuate significantly. In addition, the cost of labor at our third-party contract manufacturers and third-party logistics providers could increase significantly. Additionally, the cost of logistics and transportation fluctuates due to a number of factors, including the price of oil, available capacity, market demand, and geopolitical events. Global political conditions, threatened or actual acts of war or terrorism, instability or other disruptions in areas such as the South China Sea, the Middle East, South America and Europe, and trade, economic or other disagreements among nations, can significantly affect, and recently have significantly affectedaffected, transportation times and costs. Any fluctuations in the cost and availability of any of our raw materials or other sourcing or transportation costs related to our raw materials or products could harm our gross margins and our ability to meet customer demand. For example, the ongoing conflict in the Red Sea has disrupted shipping routes, which has caused us to continue experiencing shipping delays and increased freight costs. Although such effects have not materially impacted our business to date, such conditions could worsen. If we are unable to successfully mitigate a significant portion of these product cost increases or fluctuations, our results of operations could be harmed.

Most of our imported products are subject to tariffs, duties, indirect taxes, quotas and non-tariff trade barriers, any of which may limit the quantity of products that we may import into the U.S.United States and other countries or may impact the cost of such products. To maximize opportunities, we rely on free trade agreements and other supply chain initiatives, and, as a result, we are subject to government regulations and restrictions with respect to our cross-border activity. Additionally, we are subject to government regulations relating to importation activities, including related to U.S. Customs and Border Protection (“CBP”) withhold release orders. The imposition of additional tariffs, taxes, duties and quotas, the withdrawal from or the material modification to trade agreements, retaliatory actions from other countries, failure to report or inaccuracies in processing transactions with CBP and/or if CBP detains shipments of our goods pursuant to a withhold release order could have a material adverse effect on our business, results of operations and financial condition. In addition, a change in available exemptions, an increase in tariffs on countries where our products are manufactured, or retaliatory actions from other countries could constrain our supply chain and raise the cost of our products.

Our aspirations, disclosures, and actions related to ESGsustainability matters expose us to risks that could adversely affect our reputation and performance.

The focus and expectations of investors, customers, associates, business partners and other stakeholders concerning ESGsustainability matters continue to evolve rapidly.rapidly (for definitional purposes, our references to “sustainability” are intended to encompass a range of topics including human capital, governance, and climate). Failure to meet these expectations or to comply with emerging sustainability regulations could adversely affect our reputation, access to capital, and business opportunities. We announce initiatives related to ESGsustainability matters from time to time and have established and publicly announced certain ESGsustainability goals. These statements reflect our current plans and aspirations and are not guarantees that we will be able to achieve them. Our ability to achieve any ESGsustainability objective is subject to numerous risks, many of which are outside of our control. Our failure to accomplish or accurately track and report on these goals on a timely basis, or at all, could adversely affect our reputation, financial performance and growth, and could expose us to increased scrutiny from the investment community as well as enforcement authorities. In addition, we could be criticized for the scope of our ESGsustainability initiatives or goals.

Different stakeholder groups have divergent or conflicting views on ESGsustainability matters, simultaneous demands for greater transparency and reduced administrative cost, and a proliferating patchwork of climate-related disclosure mandates, which increasesincrease the risk that any action or lack thereof with respect to ESGsustainability matters will be perceived negatively by at least some stakeholders and adversely impact our reputation and business. If we do not successfully manage ESG-relatedsustainability-related expectationsexpectations, or if there is perceived non-compliance across these varied stakeholder interests, we may face scrutiny, reputational risk, lawsuits, or market access restrictions from these parties regarding our ESGsustainability initiatives.

Globally, a lack of harmonization and the rapid evolution in relation to ESGsustainability legal and regulatory reform across the jurisdictions in which we may operate may affect our future implementation of, and compliance with, ESGsustainability standards and requirements. Standards for tracking and reporting ESGsustainability matters are relatively new, have not been formalizednew and continue to evolve. Collecting, measuring, and reporting ESGsustainability information and metrics can be difficult and time consuming. Our selection of voluntary disclosure frameworks and standards, and the interpretation or application of those frameworks and standards, may change from time to time or differ from those of others. This may result in a lack of consistent or meaningful comparative data from period to period or between YETIus and other companies in the same industry. In addition, our processes and controls may not comply with evolving standards for identifying, measuring and reporting ESGsustainability metrics, including ESG-relatedsustainability-related disclosures that may be required of public companies by the SEC and other regulators, and such standards may change over time, which could result in significant revisions to our current goals, reported progress in achieving such goals, or ability to achieve such goals in the future, and could cause us to undertake costly initiatives to satisfy such new criteria.

If our ESGsustainability practices do not meet evolving investor or other stakeholder expectations and standards, then our reputation, our ability to attract or retain employees, and our attractiveness as an investment, business partner, acquiror or supplier could be negatively impacted. Further, our failure or perceived failure to pursue or fulfill our goals and objectives or to satisfy various reporting standards on a timely basis, or at all, could have similar negative impacts or expose us to government enforcement actions and private litigation.

AIf significant portion of our sales are to national, regional, and independentthe retail partners in our wholesale channel. If these retail partnerschannel cease to promote or carry our current products,products or choose not to promote or carry new products that we develop, or if we need to raise our discounts to such retail partners to remain competitive, our brand as well as our results of operations and financial condition could be harmed.

We sell a significant amount of our products through our wholesale channel, consisting of national, regional, and independent retail partners. In 2024, our wholesale channel accounted for 41% of our net sales. No single retail partner accounted for 10% or more of our gross sales in 2024. Because we are a premium brand, our sales depend, in part, on retail partners effectively displaying our products, including providing attractive space and point of purchase displays in their stores, and training their sales personnel to sell our products. If our retail partners reduce or terminate those activities, we may experience reduced sales of our products, resulting in lower gross margins, which would harm our results of operations. In addition, if these retail partners were to demand higher discounts on our products,products or prioritize other brands with higher margins, we may experience lower gross margins on products sold to such partners. Our relationships with these retail partners are important to the authenticity of our brand and the marketing programs we continue to deploy. Our failure to maintain these relationships with our retail partners or financial difficulties experienced by these retail partners could materially harm our business.

These retail partners may decide to emphasize products from our competitors, to redeploy their retail floor space to other product categories, or to take other actions that reduce their customers’ purchases of our products. We do not receive long-term purchase commitments from many of our retail partners, and orders received from our retail partners are often cancellable. Factors that could affect our ability to maintain or expand sales in our wholesale channel include: (a) failure to accurately identify the needs of our customers; (b) a lack of customer acceptance of new products or product expansions; (c) unwillingness of our retail partners and customers to attribute premium value to our new or existing products or product expansions relative to competing products; (d) failure to obtain shelf space from our retail partners; (e) new, well-received product introductions by competitors; (f) damage to our relationships with retail partners due to brand or reputational harm; (g) delays or defaults on our retail partners'partners’ payment obligations to us; (h) store closures, decreased foot traffic, or other adverse effects resulting from public health crises; and (i) economic conditions, including levels of consumer discretionary spending, which may be impacted by high inflation, unemployment and interest rates.

For 2024, our DTC channel accounted for 59% of our net sales, and our sales through the Amazon Marketplace represented approximately 15% of our net sales. Part of our growth strategy involves increasing sales through our DTC e-commerce channel. The level of customer traffic and volume of customer purchases through our countrycountry- and region-specific YETI websites or other e-commerce initiatives are substantially dependent on our ability to provide a content-rich and user-friendly website, a hassle-free customer experience, sufficient product availability, and reliable, timely delivery of our products. If we are unable to maintain and increase customers’ use of our website, allocate sufficient product to our website, and increase anysustain sales through our website, our continued DTC channel growth, our business, and results of operations could be harmed. Furthermore, any adverse change in our relationship with Amazon, including restrictions on the ability to offer products on the Amazon Marketplace or termination of the relationship, could adversely affect our continued DTC channel growth, our business, and results of operations.

We currently have a number of country- and region-specific YETI websites and have plans to expandcontinue expanding our e-commerce platform to others.platform. Expanding into theseadditional countries and regions may impose different and evolving laws governing the operation and marketing of e-commerce websites, as well as the collection, storage, and use of information on customers interacting with those websites. We may incur additional costs and operational challenges in complying with these laws, and differences in these laws may cause us to operate our business differently, and less effectively, in different territories. If so, we may incur additional costs and may not fully realize the investment in our international expansion.

We sell to the large majority of our retail partners on open account terms and do not require collateral or a security interest in the inventory we sell them. Consequently, our accounts receivable with our retail partners are unsecured. Insolvency, credit problems, or other financial difficulties confronting our retail partners could expose us to financial risk. These actions could expose us to risks if they are unable to pay for the products they purchase from us. FinancialWhile difficultieswe believe that our exposure to concentrations of credit risk with respect to trade receivables is mitigated by our large retail partner base, and we make allowances for credit losses, we nevertheless run the risk of our retail partners couldnot alsobeing cause themable to reducemeet their salespayment staff,obligations, useparticularly ofin attractivea displays, number or size of stores, and the amount of floor space dedicated to our products. Further,future economic conditionsdownturn. resulting in diminished liquidity or credit availability, increases in inflation rates, rising interest rates, declines in consumer confidence, declines in economic growth, or uncertainty about economic stability, may lead toIf a material reduction in salesnumber of our products by our retail partners. Any reduction in sales by, or loss of, our current retail partners orwere customernot demand,able orto creditmeet riskstheir associatedpayment withobligations, our retail partners, could harm our business, results of operations,operations andcould financialbe condition.harmed.

Continued expansion into markets outside the United States, including Canada, Australia, Europe and Asia, is one of our key long-term strategies for the future growth of our business. There are, however, significant costs and risks inherent in selling our products in international markets, including: (a) failure to effectively translate and establish our core brand identity, particularly in markets with a less-established heritage of outdoor and recreational activities; (b) time and difficulty in building a widespread network of retail partners; (c) increased shipping and distribution costs, which could increase our expenses and reduce our margins; (d) potentially lower margins in some regions; (e) longer collection cycles in some regions; (f) increased competition from local providers of similar products; (g) compliance with fragmented and rapidly evolving foreign laws and regulations, including taxesregarding taxes, duties, consumer protection, product safety, privacy, and duties,digital enhanced privacy laws, rules, and regulations, and product liability laws, rules, and regulations, particularly in the European Union and Japanmarketing; (h) establishing and maintaining effective internal controls at foreign locations and the associated increased costs; (i) increased counterfeiting and the uncertainty of protection for intellectual property rights in some countries and practical difficulties of enforcing rights abroad; (j) compliance with anti-bribery, anti-corruption, sanctions, and anti-money laundering laws, such as the FCPA, the Bribery Act, and OFAC regulations, by us, our employees, and our business partners; (k) currency exchange rate fluctuations and related effects on our results of operations; (l) economic weakness, including inflation, or political instability in foreign economies and markets; (m) compliance with tax, employment, immigration, and labor laws for employees living or traveling abroad; (n) workforce uncertainty in countries where labor unrest is more common than in the United States; (o) business interruptions resulting from geopolitical actions, including war and terrorism, natural disasters, including earthquakes, typhoons, floods, and fires, public health emergencies, including the outbreak of a pandemic or other public health crisis; (p) the imposition of tariffs on products that we import into international markets that could make such products more expensive compared to those of our competitors; (q) that our ability to expand internationally could be impacted by the intellectual property rights of third parties that conflict with or are superior to ours; (r) backlash against American brands in international markets; and (rs) other costs and risks of doing business internationally. In addition, stakeholder and regulatory expectations for supply chain transparency and traceability, including documentation of origin, materials, and labor practices, may be costly and complex to implement. We may be unable to fully trace all inputs through multi-tier supply chains, which could increase the risk of shipment detentions, penalties, or reputational harm if any supplier is alleged to be non-compliant.

The following discussion and analysis contains forward-looking statements within the meaning of the federal securities laws, and should be read in conjunction with the disclosures we make concerning risks and other factors that may affect our business and operating results, including those set forth in Part I, Item 1A, “Risk Factors” of this Report. The information contained in this section should also be read in conjunction with our consolidated financial statements and related notes and the information contained elsewhere in this Report. See also “Forward-Looking Statements” immediately prior to Part I, Item 1, “Business” in this Report. A discussion of our results of operations and cash flows for the year ended December 28, 2024 compared to the year ended December 30, 2023 compared to the year ended December 31, 2022 isare included in Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Form 10-K for the year ended December 30,28, 2023,2024, which was filed with the SEC on February 26,24, 2024.2025.

We distribute our products through a balanced omni-channel platform, consisting of our wholesale and direct-to-consumer (“DTC”) channels. In our wholesale channel, we sell our products through select national and regional accounts and an assemblage of independent retail partners throughout the United States, Canada, Australia, New Zealand, the United Kingdom, Europe, and Japan, among others. We carefully evaluate and select retail partners that have an image and approach that are consistent with our premium brand and pricing. Our domestic national and regional specialty retailers in the United States include Dick’s Sporting Goods, REI, Academy Sports + Outdoors, Bass Pro Shops, Ace Hardware, Scheels, and Tractor Supply Company. In our international regions, our notable retailers include FGL Sports and SportChek in Canada, BCF and Rebel in Australia, and GO Outdoors in the United Kingdom. We sell our products in our DTC channel to customers throughon our websiteswebsites, andthrough YETI Authorized on the Amazon Marketplace, as well as in our retail stores. Additionally, we offer customized products with licensed marks and original artwork primarily throughto our DTC channel, includingthrough our corporate sales channel,program, on our websites, and at select retail stores.stores, as well as certain wholesale partners. Our corporate sales program offers customized products to corporate customers for a wide-range of events and activities, and in certain instances may also offer products to re-sell.

During the fourthfirst quarter of 2024,2025, we continued the expansion ofexpanded our Drinkwarebag categoryofferings with the launch of ourthe new RamblerRanchero Pour Over and Food Storage containersbackpack in threetwo sizes,sizes and introduced new seasonal colorways.colorways Inacross our CoolersDrinkware and Coolers & Equipment category, we launched the LoadOut Swivel Seat and a limited release of the first Mystery Ranch-inspired Bozeman pack.categories.

AcquisitionsAcquisition

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 yearsyear 2024,2025 2023ended on January 3, 2026 and 2022was 53 weeks. Our fiscal years 2024 and 2023 ended on December 28, 2024,2024 and December 30, 2023 and December 31, 2022,2023, respectively, and were 52 weeks each. Unless otherwise stated, references to particular years, quarters, months and periods refer to our fiscal years ended in December and the associated quarters, months, and periods of those fiscal years.

Year Ended DecemberJanuary 28,3, 20242026 Compared to Year Ended December 30,28, 20232024

Net sales increased $171.2$38.6 million, or 10%,2%, to $1,868.5 million in 2025 from $1,829.9 million in 2024 from $1,658.7 million in 2023.2024. Net sales included an unfavorable impact of $2.3 million in 2025 and $8.8 million in 2024 and $21.7 million in 2023 primarily related to recall reserve adjustments, as discussed above. Excluding these recall-related impacts, sales increased 9% primarily due to volume growth in both our DTC and Wholesale channels.adjustments.

•DTC channel net sales increased $89.9$40.2 million, or 9%,4%, to $1,127.8 million in 2025 from $1,087.6 million in 2024 from $997.7 million in 2023,2024, primarily driven by growth in bothour CoolersAmazon &Marketplace Equipmentbusiness, corporate sales and DrinkwareYETI categories.retail stores, partially offset by a decline in sales on our U.S. DTC channel net sales included an unfavorable impact of $8.3$2.3 million in 2025 and $8.8 million in 2024 and $7.3 million in 2023 primarily related to recall reserve adjustments. YETI website. Our DTC channel represented 59%60% and 60%59% of total net sales in 20242025 and 2023,2024, respectively.

•Net sales in our wholesale channel increaseddecreased $81.3$1.6 million, or 12%,million to $740.7 million in 2025 from $742.3 million in 2024 from $661.0 million in 2023.2024. Wholesale channel net sales included an unfavorable impact of $0.6 million in 2024 and $14.4 million in 2023 related to recall reserve adjustments. The increasedecrease in our wholesale channel sales was primarily drivendue to a decline in Drinkware, partially offset by bothgrowth in Coolers & Equipment and Drinkware categories, as well as a net favorable impact of $13.8 million related to the recall reserves.Equipment. Our wholesale channel represented 41%40% and 40%41% of total net sales in 20242025 and 2023,2024, respectively.

•Coolers & Equipment net sales increased $101.1$49.9 million, or 17%,7%, to $748.5 million in 2025 from $698.6 million in 2024 from $597.5 million in 2023.2024. Coolers & Equipment net sales included an unfavorable impact of $2.3 million in 2025 and $8.8 million in 2024 and $21.7 million in 2023 primarily related to recall reserve adjustments. The increase in Coolers & Equipment net sales was primarily driven by strong performance in bags, soft coolers, and hard coolers.cargo.

Gross profit increased $120.1$9.4 million, or 13%,1%, to $1,072.7 million in 2025 from $1,063.3 million in 2024 from $943.2 million in 2023.2024. Gross margin increaseddecreased 12070 basis points to 57.4% in 2025 from 58.1% in 2024 from 56.9% in 2023.2024. Gross profit included an unfavorable impact of $2.4 million in 2025 and $8.1 million in 2024 and $13.3 million in 2023 primarily related to recall reserve adjustments, as discussed above.adjustments. The increasedecrease in gross margin was primarily driven by:

•lowerhigher producttariff costs, which favorablyunfavorably impacted gross margin by 110230 basis points; and

•otherlower impacts,product costs, which unfavorablyfavorably impacted gross margin by 90 basis points.points;

SG&A expenses increased by $100.2$41.2 million, or 14%,5%, to $859.1 million in 2025 from $817.9 million in 2024 from $717.7 million in 2023.2024. As a percentage of net sales, SG&A expenses increased 140130 basis points to 46.0% in 2025 from 44.7% in 2024 from 43.3% in 2023.2024. SG&A expenses included an unfavorable impact of $1.8$0.5 million in 20242025 and a favorable impact of $11.4$1.8 million in 2023 primarily2024 related to recall reserve adjustments, as discussed above.adjustments. The increase in SG&A expenses resulted from:

•an increase in general and administrative expenses of $20.4$23.8 million (increasing SG&A as a percent of sales by 50110 basis points) mainly due to highergrowth investments in technology expenses,and facilities as well as higher advisory fees, partially offset by lower asset impairments, occupancy costs, and professional feesimpairments;

•an increase in marketingemployee compensation and advertising expensesbenefits of $14.6$11.1 million (increasing SG&A as a percent of sales by 1040 basis points) mainly due to non-cash stock-based compensation expense and investments in headcount to support future growth;

The following discussion and analysis contains forward-looking statements within the meaning of the federal securities laws and should be read in conjunction with the disclosures we make concerning risks and other factors that may affect our business and operating results, including those described in more detail in Part I “Item 1A. Risk Factors” included in our Annual Report on Form 10-K for the year ended January 3, 2026. The information contained in this section should also be read in conjunction with our consolidated financial statements and related notes and the information contained elsewhere in this Report. See also “Cautionary Note Regarding Forward-Looking Statements” immediately prior to Part I, Item I1 in this Quarterly Report on Form 10-Q.

Our business is exposed to and impacted by macroeconomic factors, including but not limited to uncertainty surrounding inflationary pressures, consumer confidence and purchasing behaviors, foreign currency exchange rate fluctuations, geopolitical conflicts,conflicts such as the ongoing conflicts in the Middle East, and government actions and policies, including changes in interest rates,rates and tax rates,rates. In 2026, we have experienced inflationary pressures in certain costs, such as distribution and tarifffulfillment, rates.and expect such pressures to continue. The ultimate impact of suchmacroeconomic conditionsfactors on our business and results of operations for 2026 remains uncertain. Such uncertainties are exacerbated by the ongoing conflict in the Middle East. Although we have not experienced material impacts to date, the ultimate future impact of such geopolitical conflict on factors such as freight rates, raw materials costs, and consumer spending are unknown.

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 January 2, 2027 (“2026”) is a 52-week period. The first quarter of our fiscal year 2026 ended on April 4, 2026, the second quarter endsended on July 4, 2026, and the third quarter ends on October 3, 2026. Our fiscal year ended January 3, 2026 (“2025”) was a 53-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 AprilJuly 4, 2026 and MarchJune 29,28, 2025.

Comparison of the Three Months Ended AprilJuly 4, 2026 and MarchJune 29,28, 2025

Net sales increased $29.3$38.0 million, or 8%,9%, to $380.4$483.9 million for the three months ended AprilJuly 4, 2026, compared to $351.1$445.9 million for the three months ended MarchJune 29,28, 2025.

•DTC channel net sales increased $0.6$17.3 million to $196.8$265.9 million, compared to $196.2$248.6 million in the prior year quarter, primarily due to growthrobust acrossperformance in our YETI websites, Amazon Marketplace business,business as well as growth in YETI websites and YETI retail stores. This strength was partially offset by a decline in Corporate Sales, reflecting cautious purchasing behavior as well as a challenging growth compare in the prior year quarter.Sales. DTC channel mix was 52%55% in the firstsecond quarter of 2026, compared to 56% in the firstsecond quarter of 2025.

•Wholesale channel net sales increased $28.7$20.7 million, or 19%,10%, to $183.6$218.0 million, compared to $154.9$197.3 million in the same period last year, driven by strong growth across the U.S. and our international regions, reflecting stronghealthy consumer demand.

•Drinkware net sales increased by $11.3$4.9 million, or 5%,2%, to $216.9$241.4 million, compared to $205.6$236.4 million in the prior year quarter, primarily due to growth in our international regions and the U.S.growth. The Drinkware category growth was supported by continued innovation in our Drinkware product portfolio.

•Coolers & Equipment net sales increased by $15.9$31.8 million, or 11%,16%, to $156.1$232.4 million, compared to $140.2$200.6 million in the same period last year, primarily driven by strong performance in bags, soft coolers, bags, hard coolers,cargo, and cargo,outdoor living, reflecting continued strength across core and expanded categories.

•Net sales in the U.S. increased $21.8$23.2 million, or 8%,6%, to $293.1$391.0 million, compared to $271.3$367.8 million in the prior year quarter, primarily driven by growth in both Coolers & Equipment and Drinkware,Equipment, reflecting solid consumer demand trends.trends, as Drinkware remained flat. Demand was strongrobust in the wholesale channel as well as YETI websites, Amazon Marketplace,Marketplace and YETI retail, partially offset by a decline in Corporate Sales.

•Net sales in international locations increased $7.5$14.8 million, or 9%,19%, to $87.3$92.9 million, compared to $79.9$78.1 million in the prior year quarter, reflecting strong growth in Europe,Europe and Australia, as well as growth in AustraliaCanada and Canada, and continued momentum in Japan. Strong demand in the wholesale channel as well as Amazon MarketplacePerformance was partially offsetdriven by astrong declinegrowth inacross Corporateour Sales.key channels, reflecting increased brand awareness across key markets. Net sales in international locations represented 23%19% and 18% of total net sales in both the firstsecond quarter of 2026 and 2025.2025, respectively.

Gross profit increased $8.5$65.0 million, or 4%,25%, to $210.2$322.5 million, compared to $201.7$257.6 million in the prior year quarter. Gross margin rate decreasedincreased 210890 basis points to 55.3%66.7% from 57.4%57.8% in the prior year quarter, primarily due to the following factors:

•otherthe impacts,net impact of the recognition of IEEPA tariff refunds, which favorably impacted gross margin by 20890 basis points.points;

SG&A expenses increased $17.7$33.5 million, or 10%,17%, to $197.8$229.0 million for the three months ended AprilJuly 4, 2026, compared to $180.1$195.5 million for the three months ended MarchJune 29,28, 2025. As a percentage of net sales, SG&A expenses increased 70340 basis points to 52.0%47.3% from 51.3%43.9% in the prior year quarter. The increase in SG&A expenses was primarily driven by:

•an increase in distribution and fulfillment expenses of $4.7$10.4 million (decreasingincreasing SG&A as a percent of sales by 1090 basis points) primarily due to higher third-party logistics fees, outbound freight, and online marketplace fees, and third-party logistics fees;

•an increase in marketing and advertising expenses of $2.7$10.6 millionmillion, primarily driven by a shift in the timing of our brand campaign into the second quarter of 2026 relative to last year’s brand campaign in the fourth quarter of 2025 (increasing SG&A as a percent of sales by 10160 basis points); and

•an increase in depreciationgeneral and amortizationadministrative expenseexpenses of $0.8$5.7 million (no impact onincreasing SG&A as a percent of sales by 40 basis points). mainly due to growth investments in facilities and higher professional fees;

OtherInterest incomeincome, net was $1.0$1.6 million for the three months ended AprilJuly 4, 2026, compared to $1.4$0.3 million for the three months ended MarchJune 29,28, 2025. The change versus the prior year quarter was primarily due to lowerthe foreign$2.9 currencymillion gainsinterest onincome intercompanyrelated balances.to IEEPA tariff refunds, partially offset by a decrease in other interest income.

Income tax expense was $2.4$22.9 million for the three months ended AprilJuly 4, 2026, compared to $6.7$16.9 million for the three months ended MarchJune 29,28, 2025. The decreaseincrease in income tax expense was primarily due to lowerhigher income before income taxes. The effective tax rate was 19.9%24.3% for the three months ended AprilJuly 4, 2026,2026 compared to 28.9%24.9% for the three months ended MarchJune 29,28, 2025. The lower effective tax rate was primarily due to the impact of a discrete tax benefit related to stock-based compensation in the three months ended AprilJuly 4, 2026.