Traeger CEO Jeremy Andrus told CNBC’s Jim Cramer on Monday that the increase in shipping costs was one of the main reasons for the grill maker’s lower profit margin in the third quarter.
“Getting a 40-foot container from Asia to the United States 12 months ago was about $ 1,500. Today you spend over $ 30,000 and we are certainly averaging close to $ 10,000, ”Andrus said in an interview on“ Mad Money ”.
“Our inventory is large and heavy. It takes up a lot of space in containers, and therefore we are particularly sensitive to transportation costs,” added Andrus, whose comments provide insight into how supply chain issues large-scale during the Covid pandemic are weighing on individuals. companies.
Traeger reported an 11.7% year-over-year increase in sales in the third quarter, with revenue of $ 162 million. However, its gross profit margin of 33.5% represents a sharp drop from 45.3% in the third quarter of 2020.
Wall Street pays particular attention to companies that demonstrate pricing power during this period of inflation and pass their higher input costs on to consumers, thereby helping to protect margins. In Traeger’s case, that was the financial metric many investors have hung onto since the company released its results on Nov. 15, Cramer said.
Traeger’s shares, which went public in late July, hit an all-time low of $ 14.03 in Monday’s session. The title has lost around 28% in the last five sessions. Its record high of $ 32.59 per share was reached on August 10.
Andrus told Cramer he believes the high transportation costs will eventually ease off, which will give Traeger a boost on the road as he competes in a grill category that has grown during the pandemic.
“We are sensitive to short-term change. The world will resize itself, in terms of these costs, and we will see large flows spill over into the bottom line,” Andrus said. “But right now we’re driving the brand. We’re thinking about the engine, about the health of the brand. That’s what lasts in the long term.”
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