Traeger is feeling the impacts of tariffs and are trying to navigate through it with a variety of strategic initiatives. After the grill market crash from the Pandemic and the macroeconomic pressures since then, they’re back to weathering another economic storm.
As we have disclosed previously, approximately 80% of our Grills were produced in China in fiscal 2024 with the balance of production in Vietnam.
Jeremy Andrus, CEO of Traeger
On the revenue side of the income statement, they’ve implemented price increases to help preserve margins. To reduce their cost of goods, they’re shifting their production away from China. They plan to have a material reduction in Chinese manufacturing by 2026. They’re also working to reduce their operating expense.
Our next mitigation strategy is cost reduction. We are aggressively managing our expense structure given the volatile environment. This includes strategically reducing certain nonessential expenses as well as materially reducing any new hiring activity. Given the broader environment and the uncertainties surrounding the impact of tariffs on the consumer, we believe that expense discipline is prudent, and we will continue to identify additional opportunities to gain efficiency as we move through 2025. this doesn’t imply, however, that we are limiting investment into key strategic growth pillars. We will continue to allocate resources to nonnegotiable areas of priority including product development to ensure we are well positioned for growth as the macro environment normalizes.
Jeremy Andrus, CEO of Traeger
More details on their operating expense reduction strategy were released today. Their board approved a company-wide initiative to streamline their structure. Traeger is going to identify and implement cost savings initiatives through a multi-step plan that will be largely completed through 2025.
Traeger has promised more details in the future, once the plan has been finalized. They have only said so far that it includes a reduction in force and the centralization and streamlining of their organizational structure.
It’s an unfortunate but necessary step they’re taking given that their grills produced in China are now 45% more expensive. They are subject to the 25% Section 232 steel tariff stacked with the 20% IEEPA tariff. That eats at their bottom line and their cash flow for sustainability.