YETI's Bold Move Out Of China Amid Rising Tariff Tensions

Forbes

10-05-2025

The acquisition of Mystery Ranch has resulted in YETI's first joint product line called Ranchera, ... More launched in March, expanding YETI's presence in outdoor, travel, and technical pack categories.
The recent tariff increases in the U.S. have been a headwind for YETI, as it estimated that a 145% total tariff rate on products sourced from China and a 10% reciprocal tariff rate on products from other countries would result in a gross tariff impact estimated at approximately $100 million (about 90% related to China). However, YETI plans to accelerate its growth despite tariffs through diversification of its supply chain, continued international expansion, and robust product development.
The company has focused on diversifying its supply chain for the past two years, allowing it to be less reliant on China for its production. "Our project started in 2023, is ahead of plan, and we now expect 90% of our U.S. drinkware capacity to be ex-China by the end of the year. For context, on a go-forward basis, we expect to have less than 5% of our total cost of goods related to products from China for the U.S. market," said Matt Reintjes, CEO of YETI, in the recent earnings call.
"YETI's three key focus areas in this unique moment in time are accelerating the pace of product innovation, materially transforming our supply chain, minimizing exposure to China, and delivering operating discipline to maintain our fortress balance sheet," said Reintjes. The company posted a 3% revenue increase for the first quarter (Q1) of 2025, with the direct-to-consumer sales up 4% while the wholesale channel was up 1%.
YETI continues to demonstrate its commitment to product innovation and category expansion across multiple fronts. "For the year, we expect over 30 new product introductions versus 24 last year and a meaningful number of additional next-generation releases," said Reintjes. Coolers and Equipment sales increased 17% in Q1, mainly from bags and coolers. YETI has invested in technological advancements to further its product development roadmap.
The company has strategically acquired powered cooler technology, enabling the development of iceless portable refrigeration units that maximize storage space without sacrificing performance. "A powered cooler means that you wouldn't need ice, so instead of space being filled up with ice to keep things cold, you actually have more space for storing goods," explained Reintjes in an interview.
Drinkware has been an ongoing category of growth, with annual sales last year up 7%. While drinkware sales in the first quarter of this year decreased by 4%, this was driven by the company's shift in its supply chain process and the comparison to the previous year's quarter growth of 13%. "When we launched our first drinkware a decade ago in 2014, we recognized an opportunity to transform how people interact with their everyday vessels. We introduced performance, durability, and thoughtful design to a category that had previously lacked meaningful innovation," said Reintjes. YETI is focused on diversifying its drinkware portfolio to create durable demand across multiple use cases, with new products launching in drinkware such as insulated sports jugs and pour-over coffee.
Building on YETI's successful 2017 entry into the bags category, the company identifies significant growth potential in bags, packs, and luggage product lines that seamlessly integrate with the customers' everyday adventures. "The Camino bag is my favorite product at YETI, and I think it's the simplest. It's the one that speaks the most to what YETI is all about, which is its versatility, usability, combined with thoughtful design," said Reintjes. The recent acquisition of Mystery Ranch in 2004 has already borne fruit with the March debut of Ranchera, the company's first collaborative product line that strengthensYETI's foothold in the outdoor, travel, and technical pack markets. Mystery Ranch is a premier designer and manufacturer of durable load-bearing backpacks, bags, and pack accessories.
The U.S. market represents 77% of total revenue for YETI, but with sales down 2% in the first quarter (Q1), the company plans to continue its strong momentum with international business where the growth was 22% in Q1. "When we think about diversification, it really is in support of our continued global growth ambitions. So we think about that as the U.S. and North America, the UK and Europe, and the Asia Pacific with our incredibly strong Australia and New Zealand business today. And we think about the start of our business in Japan," said Reintjes.
YETI had its commercial launch in Japan earlier this year. "I went to celebrate and be part of the commercial launch of YETI in Japan. So I started my trip in Tokyo with the first YETI product showcase with partners from all over Asia that would ultimately become YETI customers,' explained Reintjes. The company continues to experience strong performance in Europe, particularly Germany, the Netherlands, and the UK, and plans to expand further into Asia. YETI's international business is expected to grow 15-20% in 2025 which is in part why the company has focused on supply chain diversification. "Our supply chain needs to be able to support our regional needs, and then it needs to be able to support our global ambitions," said Reintjes.
YETI's physical stores remain central to its digital-age strategy with direct-to-consumer sales up ... More 4%..
'Despite a more complex macro environment than we faced at the start of the year, we remain focused on execution and positioning YETI for long-term, sustainable growth by accelerating the pace of product innovation and materially transforming our supply chain to reduce reliance on China, while maintaining strong operating discipline to protect our fortress balance sheet,' stated Reintjes.
The 2025 outlook was adjusted down as the company focuses on accelerating its supply chain diversification efforts, stating a modest growth of between 1-4% whereas the previous outlook was 5-7%. "The primary driver of our revised top-line outlook for the year is the impact of inventory supply disruptions (due to tariffs) in connection with our accelerated supply chain diversification efforts,' said Mike McMullen, CFO at YETI, in its earnings call. The company explained that the U.S. business for 2025 should end up in the range of flat to down single-digits year-over-year, and the international business should grow by 15-20%. "YETI's strong free cash flow generation and balance sheet provide us the flexibility to navigate this highly fluid trade environment. Our strategic supply chain diversification efforts are ahead of plan, and, as previously indicated, we are aggressively diversifying our sourcing out of China," said Reintjes.