Traeger is looking to cut costs and they are implementing some major actions to do it. In an SEC filing that was released, they revealed that they are laying off staff, suspending operations of Traeger Provisions and postponing manufacturing efforts in Mexico. Their Board of Directors approved the actions at a July 18th, 2022 board meeting.
In the filing, Traeger gave no indication of the magnitude of the staff cuts. They expect costs of approximately $3.9 – $4.3 million related to severance, termination and suspending operations of Traeger Provisions.
While Traeger Provisions was an interesting concept, a BBQ meat and side delivery service, it’s not surprising to see it cut. It’s not a core competency of Traeger and even meal delivery focused companies struggle to find profitability. Plus, the meals were prohibitively expensive when compared to what can be found locally.
The most surprising of all the cost cutting initiatives is postponing nearshoring efforts in Mexico. They had announced that initiative previously as a solution to supply chain issues and costs from production in east Asia. This may be an indicator that supply chain costs and planning have improved enough to make the cost benefit equation of Mexico manufacturing not make sense in the near-term. It’s also a possible consequence of being a public company and trying to satisfy investors every quarter. They expect pre-tax charges of $2.1 – $2.7 million from suspension of this initiative.
Traeger hasn’t announced their earnings release date yet for their quarter ending June 2022. We’ll see if these plans are a precursor to bad news on their quarter. Now they can announce any earnings problems with the caveat that they are implementing solutions to try and appease investors.
While no specific timetable was given for completion of the cost cutting, they expect the actions to be substantially completed by Q3 2022. Traeger’s website currently shows no product links to Provisions and going directly to the product page shows that everything is listed as out of stock.
Traeger isn’t the only grill company experiencing difficulties. Weber is also looking to improve their financial performance by replacing their CEO and possibly looking at layoffs.