Much like Weber and Traeger, Solo Brands recently released earnings for the quarter ended June 2022. The Solo Stove maker guided down their financial performance, but showed growth year over year, aided by acquisitions. Unlike other outdoor cooking companies, what was refreshing on Solo Brand’s call is they focused on how not normal the pandemic was for business.
The reality is that over the last couple of years, customer acquisition costs have been artificially low. What companies were planning and thought that they could spend in order to acquire a new customer for the last two years, has kind of created an environment where we’ve all kind of misunderstood how that’s going to flow through when you get into a normalized environment, like we feel like we’re in now, where you really understand better what it’s going to cost to acquire a new customer.
John Merris, Solo Brands CEO
Solo Brands is different than other outdoor companies because it’s about 85% direct-to-consumer. That gives them better margins and also means that they aren’t contending with inventory levels at retail locations. Half of their supply chain is effectively removed.
They’re also doing a good job building a competitive moat around their business. 35% of Solo Stove Pi orders are coming from existing customers, and referral and repeat customers rates are both above 40%.
Looking at product innovation, Solo Stove released the Solo Stove 2.0 earlier this month. They listened to their customers on this one and added a removable ash pan to make cleaning easier. The 2.0 is going to replace the original Solo Stove once all of the inventory is sold out, which should happen soon.
They’re not done with new products this either. On the earning conference call they announced that they’ll have “several exciting product innovations, launching in the back half of the year”. We look forward to seeing what those are and covering the launches.
New products are important for Solo Stove, because while there are other innovative smokeless fire pits on the market, there are also quite a few copycat products. On the earnings call they gave an update on how the fight against those is going.
I’m not able to disclose too much quite yet. But we are very close on a positive win for us. We’re at a verbal stage, we’re close to execution on a final agreement on a pending litigation case that we have right now. So things are heading in the right direction. Our IP is holding up well and being recognized in this scenario that I’m talking about now. We believe that this is going to be a really big and important victory for us as we look forward to potentially additional knock offs and competitors in the future with relation to our IP.
John Merris, Solo Brands CEO