Middleby was one of the many outdoor brands that reported earnings this week, giving us an updated glimpse of their business. They have a large portfolio of commercial and non-outdoor residential brands, so Kamado Joe, EVO, Char-Griller, and Masterbuilt only make-up a part of Middleby’s overall company.
Inventory Levels
While Traeger was confident that inventory levels had reached a bottom, Middleby was much less confident. A large chunk of the earnings call was just focused on grill inventory levels because of the differing message.
Below is the lengthy response to a question about destocking and seasonality.
Okay. So Yes, the sell-through has not been great, but the destocking is a greater impact, right, to our revenue, right? So like both our headwinds. So — but the inventory is continuing to come down. The seasonality, you start to get an initial load in typically in the fourth quarter and then you kind of get into the heavy part of the grill season in the spring. So I mean as we’ve kind of gone through it this year, I mean, everybody has been a little bit off of their inventory levels. So that’s all got to get to a normal level. So we kind of think that, by and large, is the case as you get to the back end of the year. And then in the fourth quarter, then you get into some load-in for the grill season going into the next year. Now we do think that retailers will be more conservative in that load in going into next year. So you may not be quite back to, let’s say, where it was in the past. But as you start thinking about our comparatives, we really started getting hit with the grills in the fourth quarter of last year. So meaning there was massive — there wasn’t a load in there, it was destocking, right? So I think we’re going to be largely work through the inventory, maybe not 100% because you got different brands, different retailers, different SKUs out there. But you’ll have a lion’s share of that behind you and then you will kind of move into, I’ll say, maybe a conservative stocking season, and then that will kind of lead you to seeing what the growth season for 2024 looks like and probably healthier orders and sales in that period if you have a more normalized season.
Timothy FitzGerald, CEO of Middleby
I’d sum that up as destocking is still happening for Middleby, and their hoping it normalizes at the end of the year.
Konnected Joe
Middleby released a first of its kind connected Kamado Joe grill earlier this year called the Konnected Joe. That has been the bright spot for them when it comes to sales.
the Konnected Joe, which James has highlighted a couple of times here, I mean, that’s been kind of sold through. We’re trying to keep up with it right now.
Timothy FitzGerald, CEO of Middleby
It was mentioned a couple times on the call that the Konnected Joe is selling well. There is a parallel with the Traeger Flatrock. Both products are new, so they don’t have high levels of inventory, and their creating sell-through for the brands.