Yeti, the maker of coolers and mugs, filed for an IPO back in July 2016. But there was tepid interest in Yeti IPO. In fact, early this year it was withdrawn because of “market conditions.” But it looks like the real reason for the decision was that the valuation of YETI stock was too aggressive.
But of course, when it comes to public offerings, sentiment can change quickly. So YETI recently refiled for its IPO, which is slated to be launched this week. The company expects to issue 20 million shares at $19-$21, and the lead underwriters include Bank of America (NYSE:BAC), Morgan Stanley (NYSE:MS) and Jefferies (NYSE:JEF). YETI stock will be listed on the New York Stock Exchange under the ticker symbol “YETI.”
YETI was founded by two brothers, Roy and Ryan Seiders. Avid outdoors people, they were frustrated by the poor quality of coolers. The handles of many coolers would break and their latches would frequently snap off.
The brothers knew there had to be a better way. They decided to focus on using nearly indestructible materials to create coolers, developing compelling designs and utilizing advanced manufacturing systems.
From the start, the company grew rapidly, but its business was capital-intensive. So Roy and Ryan sold a majority of their holdings to Cortec, a private-equity firm, for $67 million in 2012.
It turned out to be a savvy move and likely enabled the Yeti IPO to occur sooner. The company has been able to accomplish the following:
- Create an omni-channel platform: Yeti has several wholesale and retail partners, including Dicks Sporting Goods (NYSE:DKS), REI, Academy Sports + Outdoors, Bass Pro Shops, and Ace Hardware. Yeti also has a direct-to-consumer, or DTC, channel that includes online and telesales. DTC sales account for 30% of its revenue. DTC is critical as it allows YETI to exercise greater control of the brand experience, obtain a better understanding of customer behavior, and establish higher levels of loyalty.
- Maintain product innovation: No longer is Yeti focused solely on the outdoors market. Over the years, the company has expanded its product line to drinkware, travel bags, backpacks, blankets, apparel and even dog bowls. This shows that the brand has mainstream appeal. What’s more, the company has been able to maintain its premium pricing. For example, some of its offerings fetch over $1,000.
- Promote Its Brand: Note that there are so-called YETI Ambassadors who help to promote the brand using a variety of means, including social media and word-of-mouth. For example, the company has about 1 million followers on Facebook’s (NASDAQ:FB) Instagram and YETI.com added 200,000 new customers in the first half of this year.
Bottom Line on the Yeti IPO
YETI’s growth has continued to be robust. For the first six months of this year, its revenues jumped by 34% to $341.5 million.
But there are still some notable risks surrounding YETI stock. Let’s face it, the consumer products industry can be brutal. Just look at the poor performances of companies like GoPro (NASDAQ:GPRO) and Fitbit (NYSE:FIT). Whenever there is a new, hot category, larger companies will look at ways to exploit it. Besides, there is also the issue of fads. Could the Yeti brand get overexposed?
Perhaps so. But when it comes to IPOs, investors are mostly concerned about short-term opportunities. And given the strength of recent IPOs – like that of consumer brand Canada Goose (NYSE:GOOS) — it’s probably a good bet that the Yeti IPO will do just fine.
Tom Taulli is the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.