Business

According to the CEO of Traeger, the cost of shipping containers from Asia jumped 500% + over last year.

Traeger CEO Jeremy Andrus told CNBC Jim Kramer on Monday that rising travel costs were the main reason for the grill maker’s third-quarter profit decline.

“Shipping a 40-foot container from Asia to the US 12 months ago cost about $ 1,500. Today you spend more than $ 30,000, and we certainly get about $ 10,000 on average, ”Andrus said in an interview with Mad Money TV channel.

“We have a large and heavy inventory. It takes up a lot of container space, which is why we are particularly sensitive to transport costs, ”added Andrus, whose comments provide insight into how the challenges of the large-scale supply chain during the Covid pandemic are affecting individuals. companies.

Traeger’s third-quarter sales were up 11.7% year-over-year, and the company posted revenues of $ 162 million. However, its 33.5% gross margin represents a sharp decline from 45.3% in the third quarter of 2020.

Wall Street is paying close attention to which companies are demonstrating price power during this inflationary period and are shifting their higher production costs onto consumers to help protect margins. In Trager’s case, it has been a financial metric that many investors have grabbed hold of since the company released results on November 15, Kramer said.

Traeger, which went public in late July, hit a record low of $ 14.03 during Monday’s session. The stock has dropped about 28% in the past five sessions. Its record high of $ 32.59 per share was reached on August 10.

Andrus told Kramer that he believed the increased travel costs would eventually come down, providing a boost for Traeger in the future as it competes in the grill category that expanded during the pandemic.

“We are sensitive to short-term shifts. The world will recover in terms of these costs, and we will see some significant inflow to the bottom line, ”said Andrus. “But right now we are leading the brand. We think about the engine, about the health of the brand. This is what lasts in the long run. “

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