YETI shares drop 10.5% in trading despite Q3 profit beat

YETI shares fell 10.5% at 3:59 p.m. ET, from a $42.79 close. The company topped profit estimates for its third quarter but missed on revenue, and it cut its 2026 adjusted sales growth forecast.

Here's how the company did:

• Adjusted EPS: 91 cents vs. 61 cents a year earlier, against the 86-cent consensus estimate
• Adjusted sales: $517.94 million vs. $487.77 million a year earlier, against the $533.51 million consensus estimate
• Net sales: $509.42 million vs. $487.77 million a year earlier
• Net income per diluted share: 60 cents vs. 48 cents a year earlier

Reported sales rose 4%. Adjusted sales rose 6%, led by Drinkware, which grew 8%, and international sales, which rose 19%.

Wholesale channel sales rose 19% to $237.3 million, while direct-to-consumer sales fell 6% to $272.2 million.

Gross margin rose 180 basis points to 57.7%, and adjusted gross margin rose 310 basis points to 59.0%.

Adjusted operating income rose 35% to $90.0 million, or 17.4% of adjusted sales, from $66.6 million a year earlier. Operating income rose 12% to $61.0 million. Net income rose 13% to $44.4 million.

Adjusted SG&A expenses rose 5% to $215.5 million. Reported SG&A rose 7% to $232.8 million, primarily due to product recall reserves, higher distribution and fulfillment costs, and growth investments.

Updated 2026 outlook

The company now expects adjusted sales growth of about 6%, down from the 7% to 8% it forecast on Aug. 13.

Adjusted EPS is now forecast at $2.90 to $2.95, representing growth of 16% to 18%. The previous forecast was $2.94 to $3.00.

The adjusted operating income margin of about 14.9% is unchanged. Adjusted operating income is now expected to rise 7% to 9%, down from 10% to 12%.

Diluted shares are now forecast at about 75.1 million, down from 75.4 million. Free cash flow of $200 million to $225 million is unchanged.

Matt Reintjes, Chair of the Board, President, and Chief Executive Officer, said the company expects the consumer environment to remain cautious and to pressure demand in the fourth quarter.

Cash and share repurchases

In the third quarter the company repurchased about 0.5 million shares for $20.0 million under its $500 million authorization. Repurchases for 2026 total about $150 million, leaving about $350 million available as of Oct. 3.

Inventory rose 22% to $394.2 million, which the company tied to lower prior-year levels and fourth-quarter demand.

Non-GAAP change

Beginning in the third quarter, non-GAAP results exclude product recall reserve adjustments tied to the company's 2023 voluntary recalls. The company did not exclude them in its fourth-quarter 2025 results.

Non-GAAP results for the fourth quarter and full year 2025 and the first two quarters of 2026 have been recast to match the new treatment.