When the Yeti Met Tariff Disclosures

Several weeks ago Calcbench had a post reviewing the various ways that companies have begun to disclose the effects of tariffs on their financial operations. 

Today we want to explore one particular company’s approach to tariff disclosures: Yeti Holdings ($YETI), maker of coolers, ice chests, stainless steel drink mugs, and related outdoor gear. 

Why Yeti? Because the company talked at length about tariffs in its Q2 earnings release filed on Aug. 7, mentioning the word 13 times. Moreover, Yeti disclosed a wide range of effects that tariffs might have on its operations, including some fascinating non-GAAP disclosures you’d typically never expect to encounter in the wild. 

Let’s begin with the headline numbers from the income statement, which were underwhelming: revenue, gross profit, and operating income all down from the year-ago period; net income and EPS up only thanks to foreign currency adjustments. See Figure 1, below.

OK, kinda yucky at that headline level — but when you look at the footnote disclosures, you see a much more nuanced picture.

Tariff-Driven Adjustments

Most notably, Yeti reported an adjusted EPS number that includes a carve-out for tariffs. Specifically, Yeti reported EPS of $0.61, and non-GAAP adjusted EPS of $0.66 — “inclusive of $0.07 net impact of higher tariff costs in the second quarter of 2025.”

The effect of tariffs appeared in a few other line items too, although usually mixed in with a few other factors; so it’s hard to pinpoint exactly how tariffs have driven up Yeti’s costs and how the company arrived at that $0.07 adjustment to EPS.

For example, as you can see in Figure 1, Yeti reported a decline in gross profit (revenue minus cost of goods sold) in absolute dollars: $256.7 million this quarter, down from $264.3 million in the year-ago period. 

But Yeti also reported an adjusted gross profit number too! Here’s how the company described that disclosure:

Adjusted gross profit decreased 4 percent to $257.6 million, or 57.8% of adjusted sales, compared to $267.5 million, or 57.7 percent of adjusted sales, in the second quarter of 2024. The 10 basis points increase in adjusted gross margin was primarily due to lower product costs and selective price increases implemented in the second quarter of 2025, partially offset by higher tariffs.

In other words, Yeti achieved some lower product costs by relocating its supply chain away from high-tariff China; and by passing along some higher tariffs to consumers through higher prices; but also ate some of those higher supply costs anyway. All of which resulted in a higher adjusted gross profit margin even though adjusted gross profit declined in absolute dollars. 

Tariff-Adjusted Outlooks

Meanwhile, looking toward the rest of 2025, Yeti is “modestly” lowering revenue expectations thanks to a slower recovery in drinkware in the U.S. market; but still… 

At the same time, we are raising our EPS outlook, primarily due to our strong operating execution and reflecting tariff reduction on China-sourced products, partially offset by increased tariffs on imports from other regions.

Then came two pieces of guidance that expressly mentioned tariffs:

• Adjusted operating income as a percentage of adjusted sales between 14.0 percent and 14.5 percent (versus previous outlook of 12.0 percent). This outlook reflects an approximate 220 basis point net impact from higher tariff costs versus the prior year…

• Adjusted net income per diluted share between $2.34 and $2.48 (versus previous outlook of between $1.96 and $2.02) including an approximately $0.40 net unfavorable impact from higher tariff costs.

So Yeti might save some money by moving away from high-tariff China, but incur other costs from previously tariff-free suppliers who now have tariffs imposed on them. That could improve operating income if the business can successfully pass along higher costs to consumers and the U.S. drinkware market revives, especially since Yeti’s international sales segment is already performing well. 

That’s some pretty complicated non-GAAP reporting. Then again, in today’s complicated world, it’s also just a sign of the times.