solo stove(US:DTC)2025-11-06 15:00Financial Data and Key Metrics Changes - Consolidated net sales for Solo Brands were $53 million, down 43.7% from the prior year, largely due to softer retail sell-in, particularly within Solo Stove [9][10] - Adjusted gross profit was $32.2 million, representing a 60.6% adjusted gross profit margin compared to 61.9% last year, reflecting a modest decline mainly due to inventory issues [10] - GAAP net loss was $22.9 million, while adjusted net loss for the quarter was $11.9 million, with adjusted EBITDA at negative $5.1 million, or negative 9.6% of net sales [11][12] Business Line Data and Key Metrics Changes - Solo Stove segment net sales were $30.8 million, down 48.1% from the prior year, primarily due to retail partners managing elevated on-hand inventory [9][10] - Chubbies segment sales were $16.5 million, down 16%, mainly due to the timing of retail replenishment compared to last year, while DTC sales were essentially flat year over year [9][10] Market Data and Key Metrics Changes - The sales environment was challenging, reflecting continued pressure on consumer demand while working through excess retailer inventory [4] - Retail sell-in remained soft, but sell-through trends were more stable, indicating a potential recovery in consumer demand [10] Company Strategy and Development Direction - The company is focused on profitability first, simplifying the organization, and taking permanent costs out, with SG&A expenses down 35.4% year over year [6][12] - The company is committed to launching innovative new products and maintaining pricing integrity to support long-term brand health and profitability [5][10] - A disciplined approach to capital allocation is being taken, with growth investments focused on new product innovation within a range of $2-$3 million annually [14] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging revenue performance in Q3 and emphasized the need to align the operating model with current demand [15] - There is optimism regarding the initial consumer response to recently launched products, with expectations for improved sales trends in Q4 [15][16] - The company is rebuilding relationships with retail partners and expects to see a more normal cadence of reordering from retailers moving forward [22] Other Important Information - The company ended the quarter with $16.3 million in cash and cash equivalents, with no outstanding borrowings on the revolver [12] - The company is transitioning to a more balanced, diversified supply chain footprint to adapt to market conditions and tariffs [13] Q&A Session Summary Question: Can you expand on the new product rollout and online sales? - Management noted that initial responses to the Summit 24 and Infinity Flame products have been strong, with over 70% of customers being new [19][20] Question: Are you nearing completion of destocking with retailers? - Management indicated that they believe they have hit the trough in Q3 and expect to see a more normal cadence of reordering from retailers moving forward [21][22]