Solo Stove parent company, Solo Brands, turned in pretty bad results for the last quarter of 2023. What makes their results worse, is that’s the quarter that fire pits are the most popular, so it’s where they make the most of their money. The good news is that new CEO, Chris Metz, has a plan to right the ship and Solo Stove will be rebuilding.
Full Strategic Review
Solo Brands is in the process of going through all aspects of their business to figure out how to get back on a growth trajectory. They’ve engaged with a consulting firm to do the review, so I’d expect major changes in the months to come.
As I mentioned, we are currently undergoing a full strategic review that will result in a clear long-term plan. As part of this, we are conducting a deep assessment of our consumers and these insights will lead to a better understanding of TAMs, profit pools, and channels where our products are purchased. These insights will also inform our product roadmap, our brand strategy, and how best to utilize our marketing dollars.
Chris Metz, CEO of Solo Brands
Unhappy with External Marketing
Solo Brands has been vocal that a big reason they attribute to missing earnings was because they weren’t receiving enough return on their marketing spend. That’s both an internal and external issue because, as noted in their earnings call, they’ve had successful campaigns but their strategy around the type of campaign didn’t fit their business need.
We have high gross margins, but we are not spending our marketing dollars effectively, and therefore, we are not achieving the return on ad spend or ROAS we expect to help drive our growth. To that end, in the past 30 days, we have hired a new Chief Growth Officer and a new leader of brand marketing and consumer insights to address this issue. We have also taken immediate action to restructure our marketing partnerships. First, we are ending our marketing contract with an outside firm that has placed much of our media spend. Second, we are also replacing our current marketing agency. We have moved our business to a new marketing agency that has strong full funnel performance and digital marketing capabilities. Our new partner has deep experience working with D2C firms that also have an omnichannel footprint, such as Nike, Athleta, Kohler, Beats by Dre, and TheraBody. We are excited about the potential to partner with a leading firm to assist us with our marketing strategies.
Chris Metz, CEO of Solo Brands
Breaking up with their current marketing partner won’t be easy though. Based on comments form the CFO of Solo Brands, they are still under a contractual relationship.
With regards to marketing, we, as Chris said in our — in his remarks, we do have a contract that we are looking to exit. It’s not been efficient in how we’ve been spending our marketing dollars and we’re spending a lot of time making sure that we can unwrap that. This year, we hope to be able to get back to a level of marketing that we know is efficient and creating a real ROAS return for us. We want to make sure that we make good investment decisions with marketing. And quite frankly, if I’m honest, quarter one, we’re still engaged with the firm that we don’t have effective marketing for ourselves. And so that’s why we’re having to act very quickly. We’ve got a new team in place that — this is their number one priority to get this back on track.
Laura Coffey, CFO of Solo Brands
Upgrade Talent
Another area that Solo Brands is looking to improve as part of their rebuild is upgrading the talent internally. They’ve already changed out some of the executive team, but they want to add more talent to the organization.
we need to recruit a talented leadership team, a team that has what I call, been there, done that, experience, a leadership team with a proven track record for both results and attracting other talented people to strengthen our team.
Chris Metz, CEO of Solo Brands
More and better talent is something that was talked about frequently throughout the earnings call.
We need to bring in talent and it starts at the top. Great people attract great people. So if you look at the team that I’ve begun to assemble in my first 60 days, we’ve hired a Chief Financial Officer. We’ve hired a Chief Growth Officer. We’ve hired a Head of Brand Marketing and Consumer Insights. We’ve hired a Head of People. So we started to really build out the leadership team. Now each of these great leaders in turn are starting to go build out their organizations as well.
Chris Metz, CEO of Solo Stove
Product Innovation
What helped Solo Stove’s results in Q4 last year is they had a ton of product releases. It seemed like every week they were releasing a new product. Much like Traeger noted on their earnings call, new products help buoy top line revenue and strong margins.
Now I’d also be remiss if I didn’t mention the fact that the lack of product innovation over the past 12 to 18 months is a contributing factor as well. When you think about it, we were born as a product innovator and we created entirely new categories like the firepit. Now I’ve spent my entire career driving product innovation at various consumer durable goods companies, and I can assure you that we will bring this strength back to our business. It’s going to take some time, no question about it, but it’s going to be a big priority for us.
Chris Metz, CEO of Solo Brands
Solo Stove wants to get back to having a robust pipeline. A key to developing that pipeline is having a good product leader.
Another critical area of focus for us will be developing a more cohesive product innovation pipeline. We’ll be hiring a new leader of product development, and we’ll begin building a compelling three to five year product roadmap that will enable us to bring newness to our core category while also expanding upon our core. All of our new products will be developed with our key channel partners in mind, and we’ll have an integrated go-to-market plan that will optimize our product launches.
Chris Metz, CEO of Solo Brands