Strvye Reports Drop in Net Sales in Q3, CEO Sees “Renovation Opportunities”
Despite declining sales year-over-year, executives at meat snack brand Stryve said on the company’s third quarter earnings call yesterday that it is making progress in reversing losses and controlling expenses.
Net sales for the quarter were $6.2 million, down from $9.1 million in the year-ago quarter. Gross profit as a percentage of net sales was 22.4% ($6.2 million), a drop from 35.9% ($3.3 million) in the 2021. Full-year net sales are estimated to be in the range of $29 to $32 million.
Operating loss was $4.7 million, compared to an operating loss of $8.2 million for the third quarter of 2021, while net loss dropped from $8.2 million to $4.97 million. Executives said this was the lowest historical net loss the company has seen.
Additionally, though beef prices have continued to be elevated, Stryve improved its Q3 gross margins to 22.4%, after seeing negative gross margins in the second quarter.
Chris Boever, Stryve CEO, attributed the margin growth and net loss decrease to “productivity initiatives” he began to implement after joining as CEO earlier this year. Operating expenses, as a result, have dropped to $6.1 million this past quarter, compared to $11.5 million in the second quarter and $11.4 million in Q3 2021.
Marketing and Sales Efforts Get an Overhaul
Utilizing shopper data and retailer insights, Boever said the company plans to better allocate funds and resources towards the core portfolio of products.
“This fact-based, disciplined approach will ensure that our growth agenda is focused in control and mindful of enterprise resources, including capital planning,” Boever said. “As a newer [meat-snack] brand with a differentiated offering, it is crucial that we express the features and benefits [of our products] in an impactful way, [and] appealing and structured manner.”
Renovation opportunities, he added, include packaging adjustments to better convey product attributes and help drive consumer trial. Most consumers, Boever said, are not aware of the value biltong, and Stryve in particular, delivers when looking at the amount of protein per ounce. In addition to branding, the company also plans to standardize its packaging footprint to improve shelf presence and streamline its manufacturing process. The new branding will be announced at the start of 2023, a spokesperson told NOSH.
The ecommerce channel will also undergo changes, with Boever stating the company has cut back on its marketing spend after investing too heavily in driving conversions. Additionally, rather than maintaining a separate site, storefront and cart for its Kalahari, Stryve and Vacadillos brands, all three will be consolidated down to one purchasing experience, allowing customers to mix and match across the portfolio.
“We see a lot of value in that direct to consumer business, but it’s gonna love us as much as we love it,” Boever said. “And therefore it’s got to [have a] return on that investment at the same time.
Portfolio Focus
Stryve, which owns its manufacturing arm, over the last quarter has eliminated over 180 SKUs across an array of different pack sizes and combinations, including private label
“This is our promise: to grow quality revenue and prune away product size and SKUs that are either unprofitable or do not contribute enough to support our hurdle rates,” Boever told analysts on the call. “I have successfully accomplished similar initiatives multiple times in my career, and while this is not easy, it has proven to be extremely successful.”
While the long-term benefits will come, Boever said, in the short-term quarterly revenues may be impacted as the company liquidates some inventory.
Currently, 80 SKUs remain in the portfolio, with only two SKUs reporting over 20% ACV. By cutting back on the number of products, the hope is to redirect interest towards other products, ultimately achieving closer to 40% ACV.
Former CEO and co-founder Joe Oblas, who departed the company last month, told NOSH previously that the company would launch pet treats in the coming months. Boever did not share what future innovations would look like, only telling analysts the company would “be doubling down on our core products,” that use high-quality steak as their main ingredient.
Boever also declined to comment as to the status of Stryve Nutrition, the company’s supplement business, which Oblas had told NOSH may be spun off. In response to an analyst who asked about the product line, Boever said the company will provide “more clarity” around the company’s offerings in the coming weeks.
“With just six months with the company, I am even more encouraged today than when I started,” Boever said. “The energy and commitment from our team continues to excite and inspire me and gives me great confidence around our ability to build an enduring franchise of great brands.”
