After nearly two years of pushing to go public, Yeti Holdings Inc. has decided against it.
A legal filing with the U.S. Securities and Exchange Commission on Friday reveals that CEO Matthew Reintjes made the decision as a result of “market conditions” and asked that materials provided to the government for the initial public offering (IPO) be returned to the company.
The Austin-based maker of luxury coolers and drinkware was founded in 2006 by brothers Roy and Ryan Seiders. Products were first sold in specialty outdoor retailers and have since gained mass appeal, showing up for sale in hardware, grocery, and sporting goods and hunting stores.
Cortec Group Management LLC, a private equity firm, made a $67 million investment in YETI in 2012. Then four years later, YETI filed a plan to list on the New York Stock Exchange, revealing sales of $468.9 million in 2015, up from $89.9 million in 2013, in an IPO prospectus, according to reports at the time.
The distribution expansion was driven by YETI seeking a $5 billion valuation at the end of 2016, the Wall Street Journal reported that September.
So when some independent outdoor retailers received a “notice of termination” earlier this year, they began speculating on the company’s strategy and if it was abandoning specialty retailers who gave footing to the brand’s success.
Todd Frank, owner of The Trail Head in Missoula, Montana, shared his letter on Facebook on Feb. 19 and said that it was the first time he had been “fired” by a brand. He said sales of YETI’s $40 tumblers had been decreasing in his shop.
“This rings of the old story about the guy who takes the girl to the dance but she ends up leaving with the quarterback,” Frank told us. “They are leaving the core competence of the business that got them to the dance.”
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Darren Bush, owner of Rutabaga Paddlesports in Madison, Wisconsin, said the letter was like a breakup he thought was already over. He said his store stocked YETI when they first started out, but stopped selling the brand when sales decreased. That's why he was confused when he received the letter.
“I thought it was funny,” Bush said in February. “You’re not breaking up with us, we already broke up with you. YETI was a specialty brand, then it was suddenly in the hardware store and pharmacy down the block. It’s like, you open up to everybody in the world and you go from premium to not so premium.”
When asked about the brand’s strategy, Kirk Zambetti, senior VP of sales, first sent a statement through a public relations company.
“YETI is committed to building and strengthening our specialty retail channel while continually improving the consumer experience,” Zambetti wrote. “As part of normal course, we regularly evaluate our retail relationships so our specialty retail partners and consumers enjoy an exceptional YETI experience.”
Reached Tuesday, Zambetti said because YETI is a confidential, privately-held business, he could not divulge how many retailers received the letter this year. But he stressed that not going public is not connected to cleaning distribution. The notice was an annual action.
"I really want to stick to my previous statement that we are highly committed to specialty retailers," Zambetti said. "A huge part of our success story is through specialty retailers and what they’ve been able to do."
Christopher Gregory with Compass Advisors, a merger and acquisition firm in Bozeman, Montana, said YETI’s notice is typical due to the natural flux of dealerships’ performance, and brands would be remiss if they didn’t keep track of that.
“The letter that YETI issued is very common, especially for a strong brand that has certain requirements,” Gregory said. “If certain retailers aren’t meeting those benchmarks, then at some point, there unfortunately has to be a termination of retailers. We see that often, especially in the stronger brands, it's very important to protecting their brands' integrity."
Gregory added that whether or not YETI is applying those standards equally is a different story that he cannot speak to without knowing the brand’s strategy.
In the past few years, YETI has fought off knockoff and similar products through lawsuits. Brands like Igloo Products Corp, Coleman. Co, and RTIC have introduced cheaper coolers with similar features. In fact, YETI settled with RTIC over patent infringement just last year.
Competition is a given in a market as saturated as drinkware and coolers, said Rich Hill of Grassroots Outdoor Alliance, of which YETI is a partner. But Hill said he has yet to see another brand replace YETI in the hearts of consumers.
The letter seemed like a way for the brand to regain control and clean up distribution after expanding so rapidly, Hill said.
"We absolutely support a great brand like that trying to clean up its mess," he said. "How they did it could’ve been better. You can’t ignore the importance of relationships, or outsource your communication to your legal department."