Sharon Zackfia: Great. Thank you.
Matt Reintjes: Thank you.
Operator: The next question comes from Jim Duffy from Stifel. Please go ahead.
Jim Duffy: Thank you. Good morning. Great execution, guys. I’m going to take a different approach to questions on future years. Matt, I’m hoping you can speak to how you’re thinking about strategic objectives for the organization in 2024. What are the areas of the business that are going to be prioritized for allocation of capital? What are some of the areas where you want to strengthen your organizational competencies? What are some of the operational objectives where you believe you have room for improvement? Thank you.
Matt Reintjes: Good morning, Jim. Thanks for the question. I’d answer in a couple of ways, and I think you’ll hear us talk more about this as we go into 2024. But if I refer back to my prepared remarks, we sound simplistic but we introduced a little bit of new language, which is four key things; brand, product, channels, and in geographies. And I’ll take three of those four. The investments we’ve made in growing the brand and the places that we’re showing up and the way we’re connecting with consumers domestically and globally, I think you’ll see us continue to do that and take what I believe is the greatest in-house marketing and creative team out there and putting us in front of a really diverse audience. And I think you saw elements of that, if you followed us this year, and you heard elements of that in the quarter.
But I think that investment is one of those things that just in the rhythm of what YETI has done and done really well without outsized sort of investment is part of the rhythm of what we do. We’re really smart with the dollars we spend. We’re really directed in how we do it in a really impactful nuanced way. I think on the product side, you’re going to see us continue to invest in innovation. And that’s capabilities and capacity as an asset-light business. That’s smartly adding talent to an incredibly talented R&D and product and design and sourcing team that we have within YETI. And so I think that would be the second piece is really amplifying the capabilities that we have within the business, and then rounding out capacity and rounding out skills that allow us to get into more and more what I would call YETI worthy innovation areas.
As it relates to geography, to Sharon’s last question, we think the U.S. market remains incredibly receptive and strong for product innovation and to our expanding brand reach. But really, when I think about geography, I think about the international opportunity. In the very early days we are in the UK and Europe, and the large attractive markets where we haven’t hit maturation in scale. And we can do that in an efficient and effective way, like we have seen in Australia and Canada. And then looking kind of further out to what the opportunities are in select markets in Asia. And so I think if I rounded it all up, I would say, continue to grow the brand the right way, smartly, as we think about our OpEx and SG&A. Put kind of positive pressure into the innovation and expansion, the product portfolios and the redefinition of Drinkware and the expansion of coolers and equipment.
And then the third one would be the thoughtful acceleration of our geographic expansion to take advantage of the inherent opportunity that we see the proof points for.
Jim Duffy: Excellent. Thank you so much.
Matt Reintjes: Thanks, Jim.
Operator: The next question comes from Robby Ohmes from Bank of America. Please go ahead.
Robby Ohmes: Good morning. Thanks for taking my question. It was actually — the question is really, I just want to clarify on the hard coolers. So hard coolers were down against tough shipment comparisons, but they’re an outstanding performer at retail right now. And that’s the sell-through or is it doing really well on DTC, because it sounds like the weaker DTC that there’s some pressure from average order size? I’m just trying to get an understanding of what hard coolers did in the quarter.
Matt Reintjes: Yes. Hi, Robby. So I would say is that it did — hard coolers did well on a consumer demand basis, which encompasses both wholesale sell-through where we saw really strong growth of hard coolers on a sell-through basis as well as within DTC. So when we talk about consumer demand, that’s essentially what we’re referring to is kind of U.S.-based sell-through and our major DTC channels. And we did see growth of hard coolers within DTC. I think the comments around AOV I think are driven by a couple of things. One, not having the soft coolers in DTC for the full quarter; and number two, more of a kind of strength of Drinkware and new customers coming into — growth of new customers coming into the brand via Drinkware and a UPT question within Drinkware as well. So that was the real story around kind of the AOV. But to your original question, we feel really good about how hard coolers performed at a point of sale level within wholesale as well as within DTC.
Robby Ohmes: That is really helpful. And just a follow-up question. I’m just curious if you’re seeing any changes in the competition in what they’re doing? And then are any of the partners looking to sort of merchandize into lower price point versions of what you guys do, just given the challenges out there for the consumer?
Matt Reintjes: Thanks, Robby. I’ll take that one. I would say a couple of things to that. We’re not seeing lower price point trade down. I think that as we talked in the past, I think when you have products in a premium category, we tend to be kind of a want category, not a need category. And I think our job and we done it successfully for years, and I think in the most recent quarter is drive that desire. So we haven’t seen that trade down. I’d say from the competitive environment, particularly in Drinkware, I think there’s a lot of interest in that category. There’s a number of entrants that have come into it over the last 12 to 18 months or kind of driven what I would call a significant share of voice in that space. But I think that when we look at our results, the partnerships we have with our wholesale partners, the success we’re seeing in our DTC business, we’re taking a different tact, which is continuing to thoughtfully expand our Drinkware category and business.
You’ve seen us do it this year, which is not just chase what I think is an important trend but a trend in hydration, make sure we have relevant products. But then also we continue to redefine the game and make sure that we’re in front of consumers in more broadly defined Drinkware. And I think you’ll see us continue to do that. We think that’s a winning strategy. We think it’s not only a winning strategy in the near term, but the mid and long term. And we’re seeing that receptivity in our sell-through and point of sale. And we’re also seeing that receptivity from the welcome from our wholesale partners.
Robby Ohmes: That’s great. Thanks, Matt.
Matt Reintjes: Thanks, Robby.
Operator: The next question comes from Brooke Roach from Goldman Sachs. Please go ahead.
Brooke Roach: Good morning. And thank you for taking our question. Matt, I was hoping you could elaborate on your plan for contribution of growth from new innovation versus the core, as you look ahead. How are you thinking about the potential for the YETI brand to move into new categories beyond the targeted expansions of your current categories? And do you think that adjacent categories require any innovation knowhow or functionality that you currently don’t have in-house?
Matt Reintjes: Hi, Brooke. Great question. And I’ll mix a couple of things. I think I would call — really it’s definitional to start with, which is if you say that our base is, and we have a proven competence in Drinkware, hard coolers, soft coolers, I would extend the early days of cargo, but all the capabilities and competence in cargo, in bags, we think within that what I would call base, there’s significant opportunity for expansion, new customer use cases, new use environments, innovation, including things like colorways, but also new form factors. So within that core, we think there’s significant opportunity, and I have all the confidence in the world in the talent capabilities between our in-house engineering design plus our incredible supplier relationships and sourcing and procurement teams.
As we think about the roadmap beyond where YETI could go where customers we believe have given us explicit permission and almost borderline demand that we would into it, I think we do have many of those capabilities in-house to go after some of those things. I think some of them, as I mentioned earlier, may be additional talent capability capacity that we would bring into the business. But that’s no different than our evolution from being a hard cooler-only company back in 2014 to adding soft coolers, to adding Drinkware, to then adding cargo, to adding bags, the small but mighty chair business we have. We make incredible chairs and blankets and all these other things that are sort of percolating out there. So I don’t think there is something that is so epic a shift that it wouldn’t feel in line with what we’re doing.
