YETI Holdings, Inc.
Q1 2021 Earnings Call Transcript

Published: 13 May 2021

[Operator:]

Greetings, and welcome to the YETI First Quarter 2021 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Tom Shaw, Vice President of Investor Relations for YETI. Thank you. You may begin.

[Tom Shaw:]

Good morning. Thanks for joining us to discuss YETI Holdings Quarter 2021 results. Before we begin, we'd like to remind you that some of the statements that we make today on this call, including the statements related to the impact of the COVID-19 pandemic on our business, may be considered forward-looking. And such forward-looking statements are subject to various risks and uncertainties that could cause our actual results to differ materially from these statements.

[Matt Reintjes:]

Thanks, Tom, and good morning, everyone. Following an outstanding 2020, YETI is off to a great start in 2021. At the heart of this performance is exceptional demand for the YETI brand, including momentum across our global digital businesses and the strength of sell-through at wholesale. During our commentary last quarter, we highlighted two themes that we believe would drive our performance and focus throughout the year. First, we talked about YETI's ability to connect with customers in meaningful ways. This connection balances real, relevant brand storytelling with products that are always rooted in performance, durability and versatility. We believe this approach not only drives demand for the brand as customers are increasingly focused on active lifestyle and outdoor pursuits, but this also positions us for continued success as people resume activities that were disrupted by the pandemic, such as commuting, weekend sports and backyard gatherings. Second, we highlight importance of a continuing focus on the digital-led world. This has shaped our 2021 investment strategy with an emphasis on digital demand creation, product launch, data analytics and our technology stack ensuring we are actively driving both YETI and our wholesale partner e-commerce initiatives to complement what we do in store. Our top to bottom performance for the quarter led by net sales growth of 42%, the highest growth rate we have registered as a public company is a result of these two focus areas. Direct-to-consumer sales growth of 42%, the highest growth rate we have registered as a public company is a result of these two focus areas.

[Paul Carbone:]

Thanks, Matt, and good morning. I'll start with a review of what was an incredibly strong first quarter, followed by thoughts on the balance of the year and our updated outlook. We will then open the call up for your questions. Net sales increased 42% to $247.6 million compared to $174.4 million in the prior year period. Brands momentum was broad-based across all channels, and we were very pleased with our execution during the period. Notably, net sales increased 36% for the first 10 weeks of the quarter then increased 66% for the final three weeks of the period against the beginning of the COVID impact in the prior year period. Looking closer at our channel performance, direct-to-consumer net sales grew 59% to $126.8 million compared to $79.6 million in the same period last year. Direct-to-consumer performance was driven by strength in both our Coolers & Equipment and Drinkware categories. All direct-to-consumer channels grew during the period with particular strength from yeti.com. This performance drove our direct-to-consumer mix to 51% of net sales for the period compared to 46% in last year's period. Wholesale net sales increased 27% to $120.8 million compared to $94.8 million last year. Wholesale performance was driven by strong growth across both our Coolers & Equipment and Drinkware categories. Sell-through levels continue to outpace sell-in for the quarter, resulting in channel inventory remaining down year-over-year. By category, Drinkware net sales increased 32% to $148.9 million compared to $112.6 million last year. Demand again, was broad-based across our drinker lineup of tumblers bottles, mugs, coasters and jugs. This includes ongoing momentum of newer products like our expanded coaster line in 10-ounce Rambler as well as vitality in our heritage Rambler sizes, where we have either standardized or improved our lid solutions with Chubb caps and bottles and mug sliders with tumblers. Demand for customization also remains robust across yeti.com and our corporate accounts. Coolers & Equipment net sales increased 57% to $93.5 million compared to $59.5 million during the same period last year. The vast majority of this growth continues to come from the incredible demand for our hard and soft coolers across all channels. We were also highly encouraged by the initial reception of our new bags collection that debuted in late February. Internationally, net sales rose 146% for the quarter to reach 9% of total net sales. led by a more than threefold increase in Australia as well as strong contributions from Canada, the U. K. and Europe. Gross profit increased 57% to $145.2 million or 58.6% of net sales compared to $92.5 million or 53% of net sales during the same period last year. The 560 basis point year-over-year expansion was driven by the following favorable factors

[Operator:]

Our first question comes from the line of Camilo Lyon with BTIG. Please proceed with your question.

[Camilo Lyon:]

Congrats on a very strong start to the year. My first question is on inventory. And Paul, you just gave some color here at the end of your remarks. So with inventory down 9%, you're speaking about impacts from supply chain all in the context of a very strong demand that is showing no signs of ebbing. Can you talk about how the inventory flows are expected to unfold through the balance of the year? Is there any sort of the choppiness or fluctuations that we would expect to see for the balance of the year and how that might impact your ability to continue to meet this demand both PDC and wholesale? And then my second question on the international components, very strong results now about 9% of the business. Can you tell us about the margin composition of international? And how would you think about the continued growth rates of that segment?

[Matt Reintjes:]

So on inventory, we're in the supply chain, we're really happy with our efforts exiting 2020 and throughout the first quarter. So to just to restate the numbers, while we ended down 9% year-over-year, is a 31% sequential increase off of Q4. Last year at this time was plus 9% sequential increase. So we really able to build inventory ahead of our plan while also over delivering the top line relative to our plan. So we're really happy where we sit today, even though we're down year-over-year. Beginning in second quarter, we will turn positive as we lap the big negatives of last year. And that's why we wanted to give color on a two-year CAGR basis, and as we said, we'll be in the mid-teens, low to mid-teens throughout the rest of the year. For Q1, it was plus 6% on a two-year CAGR, even though it was down 9% year-over-year. So we're really comfortable and excited about building back that inventory into a strong position. Clearly, as we go into Q4 ending Q3 will be on a single year basis, probably our highest growth rate year-over-year, but in the two-year stack, similar to the mid-teens. On international, in the margin profile, we like in the business in international in total, if you think about Canada, Australia, Europe, the margin profile is very similar, certainly at the gross margin rate and then as you get down to contribution margin. In the smaller markets, so as we start up Europe and the U.K., we don't have the leverage or the scale there yet as we do in Australia and Canada. But as that business continues to grow, we're really excited about it and like the way we've operated that business from a margin profile.

[Camilo Lyon:]

Thanks. If I could just ask one follow-up on that inventory, are you at all planning to constrain the demand to perpetuate the sell-through exceeding sell-in. I recall that last year in the summer, late summer to early fall, your significantly below your cooler inventory than what the market was demanding? So I'm just curious to see how you're planning on balancing demand versus re-upping the supply and how you how you really want to kind of continue to maintain that demand outpacing supply situation? And how that should play out?

[Matt Reintjes:]

Camilo, this is Matt. What I would say is we're really focused on the health of our existing wholesales partners' inventory positions and ability to meet that demand, while also understanding we have a fast-growing D2C business. I think the thing that you would see as we play out throughout the year is less focus, which has historically been our approach, but less focused on any type of expansion and more focus on getting our wholesale partners and making sure that we have our D2C business well supported from a supply perspective to continue to meet the rising demand that we're driving through our breadth and depth marketing strategy.

[Operator:]

Our next question comes from the line of Randy Konik with Jefferies. Please proceed with your question.

[Randy Konik:]

Yes. So one thing I want to go over with the international. It looks like you got 300 basis points of incremental penetration in only a quarter. Are you doing a better job on or give us some perspective on what you're doing to improve fulfillment there? And just like over time, as we're seeing this nice acceleration in that international. What do you think is like a good kind of a medium-term ballpark goal to get to from a penetration standpoint there, recognizing you're working on fulfillment in the back end of getting supply to the international markets? Thanks.

[Matt Reintjes:]

Yes, Randy, it's not unlike what we've seen as we built out the U.S. market. And we have internationally, if I were to kind of bucketed in three markets and we talk a lot about Canada, Australia and Europe is those three markets. There are different stages of their maturation. And what we're seeing is that as we have established in Australia and as we have established in Canada since 2017, what we're seeing now is the benefit of that growth acceleration as we have store penetration as we've matured our e-commerce businesses. And as you said, as we've matured our supply flow, understand mix, understand in market demand. And I think you're seeing that and we mentioned on the call particularly in Australia, the incredibly strong growth we saw in the first quarter that matched near full year demand of last year. And so I think that growth has been has been really strong and the receptivity of the consumer. In Europe, we're earlier in that expansion, as we mentioned on the call, building out our points of distribution at wholesale, which was slowed last year by COVID also building out the maturity of our infrastructure and our supply. So we feel great about how that business is positioned for forward growth. What it can become, I think we're still sorting through how big those markets are. We like the end user in many of those markets. We like the size of those markets when we look at them relative to the U.S. market and how they index to the U.S. market. We think there's a lot of opportunity to continue to expand our international footprint.

[Randal Konik:]

Great. And then on the backpack and bag side of things, on the backpacks and so it is amazing. You are constraining it sounds like the constraining the sales of that somewhat you're still exclusive to yeti.com. Can you give us some perspective on how you're thinking about that product category in terms of potential expanded distribution and potentially to wholesale or what have you? And maybe some of the learnings you're getting in something like a category like this, which basically solidifies the view that YETI is a brand for everything, right? So kind of give us some perspective on what you're learning there around this bag product distribution? And what it can tell you about the opportunity for the brand to extend to other categories going forward?

[Matt Reintjes:]

Yes. I would say a number of learnings. We went in, as we talked about on prior calls with a very purposeful approach to the launch of bags. We went in with a different approach to broad-based awareness and broad-based kind of both for the brand expansion and the product expansion into the category. And we think our learnings from that is there's a real receptivity and appetite from the consumer to YETI's expansion into bags We also went into it with the idea that we wanted to give our supply chain a chance to mature and grow into what we think is a really exciting category for you. And you're seeing some of that with our in-stocks and out-of-stocks, which is the build into. And then the third piece, we also were engaging as the world reopened and as travel resumed, and there's a lot of talk about it now, and we're starting to see the movement of people domestically and the talk about international travel. We think we're still on the front end of that. So we've taken a very measured and paced approach to that rollout, to the ramp-up of our supply chain, but had our marketing and our brand building really run in front of that to build up that demand. And so what we're excited about the category, we're excited about the receptivity. We've mentioned in the prepared remarks some commentary we've received from the market on reviews of the bags. And I think it's a category that as we step into it both has real opportunity but will also give us a lot of point confidence, but also approach and thought how we continue to expand into other product families.

[Operator:]

Our next question comes from the line of Robbie Ohmes with Bank of America Merrill Lynch. Please proceed with your question.

[Robert Ohmes:]

Two questions, one for Matt, first, and then another one for Paul. But Matt, the hard and soft cooler business was called out. It sounds like the momentum there is great. Can you kind of talk through is it -- are you seeing a lot of repeat customer purchases? Or is it new customers coming into the hard and cooler business? Or there is there a bigger response to new colors there? And kind of how should we think about the momentum in the cooler business?

[Matt Reintjes:]

Yes, Robbie, I would say a couple of things as it relates to the hard and soft coolers is they continue to be strong performers as we said at the beginning of the year. The majority of the growth in our coolers equipment category this year was going to be driven by those hard and soft coolers. We didn't place a massive bet on bags being that growth driver. So your read was correct that, that growth is really those products continuing to perform very well. I think as we think about new versus existing consumers, our best data points is the data we get from our own e-commerce sites. And what we said in the past and we continue to see in Q1 was a really nice balance of new versus returning customers, we're not seeing a fundamental difference in purchase behavior and mix. We're starting to come into the time of year where we acquired a large number of customers last year as we went into Q2 through Q4 last year. And that's something we're focused on is not only new customer acquisition, but retention and driving repeat purchase. And that's a big part of why we made the investment starting in 2020 and into 2021 around our data analytics and advanced analytics work.

[Robert Ohmes:]

Got you. That's really helpful. And then, Paul, The gross margin was pretty amazing this quarter. If you exclude the information you gave us on GSP and the freight pressures and everything, and we sort of assume that goes away. Is there a -- what is -- how are you thinking about the long-term gross margin opportunity for YETI now? Is it higher than ever? Can you give us any color on what the long-term gross margin target might be today given what you achieved this quarter?

[Paul Carbone:]

Yes. So thanks, Rob. I'll reiterate a couple of things that we've said in the past. We don't see this -- there is no feeling as we hit 58 or 59 that it's in the business or in the model that, that's a ceiling. As we look forward, as we've talked about, we're going to continue getting gross margin expansion from channel mix product cost improvements, and those are going to be offset by investments in the business and then any other headwinds in this case, higher freight, the inbound free. The GSP, I think, will either happen or won't it will be renewed or not. But we believe that a sign of a good business is a healthy gross margin. And we want to balance as we let that gross margin expansion flow through, how do we reinvest in the product? And we have those conversations weekly about adding value into the product to differentiate it. So there's no natural ceiling. We don't have any new long-term outlook on gross margin, but we really like the way the business is -- the levers it has from channel mix, product cost improvements, and then that gives us the ability -- the team to talk about how do we reinvest in the product.

[Operator:]

Our next question comes from the line of Peter Benedict with Baird. Please proceed with your question.

[Peter Benedict:]

I guess, Matt, you mentioned brand awareness, some pockets of growth, I guess, in some of in Northwest and the Northeast. Can you maybe build on that a little bit, give us a little sense of what you're seeing? And related to that, I'm not sure if you've got brand awareness stats in some of these international markets, I think Australia, Europe, et cetera, maybe how those are trending at this point relative to your expectations? That's my first question.

[Matt Reintjes:]

Yes. I would say, Peter, a couple of things. I'll start with the international markets. It's still early from a brand awareness perspective there while we're excited about the sales. We're excited about the velocity of growth. We're excited about the receptivity. I would say our brand awareness is still low. And that's a great scenario that we're seeing the momentum we are Australia and Canada, in particular, and we would say our brand awareness continues to be low, and we continue to be discovered every day, which I think is high. And I mentioned the growth acceleration we're seeing in Australia where the first quarter was equal to half of last year's full year. I think that is really driven by that momentum we're building in that discovery not unlike some of those early day runs, as I mentioned we saw in the U.S. But that's something as we mature in those markets. And as the stats would start to make sense, we'll start to measure a little more deeply. In the U.S., as you know, we've been tracking it for some time. We continue to year-over-year broadly kind of tick ups in awareness. What's nice about the progress we've made over the last five years is that increase in brand awareness continues to be kind of a consistent step-up, which is balanced with not only getting new customers and making new customers aware but we're driving new purchase with a really healthy balance of repeat and existing customers. So I called out those regions because of the regions that five years ago were the most underdeveloped and we were the most under known. We spent a purposeful effort in making sure that as we broaden our pursuits and activities, as we broaden our ambassadors, as we broaden our media reach that we're targeting those markets, and we're seeing the results of it. But broadly speaking, across the U.S., we continue to find good growth in all the regions in which we're operating.

[Peter Benedict:]

Okay, great. That's helpful. And then just on international, obviously, super strong growth there in the first quarter. Any reason why maybe, call it, triple-digit type growth can't persist over the balance of the year. I know second half of last year got stronger, but just trying to get a sense for maybe where that business could land this year. And what are the infrastructure investments that you're making here? I mean you talked about some of the marketing stuff and the brand positioning, et cetera. But just from an infrastructure standpoint, maybe to fulfill or supply those markets, what's -- what are you doing on that? What's over -- what's on tap for the next a couple of years in order to make that business run optimally.

[Matt Reintjes:]

Yes, I'd say, Peter, sitting here today, we don't see anything that would be a headwind to that growth for the rest of the year. I mean, we're still really building out our European footprint, and we like really like what we're seeing on the D2C side out of our broad European market. Similar in Australia and Canada where they're more developed. I would say, from an infrastructure perspective, in Australia and Canada, it's what I would call fill-in type things. We have the logistics. We have the D2C to support the fulfillment. What we're doing is now bringing more targeted resources, whether those be incremental brand folks, the add of e-commerce expertise or additional expertise in those markets to keep stoking those businesses. Europe is a little more underdeveloped. We're fully operational, but what we're looking for in Europe is our continue to increase our logistics and fulfillment footprint, continuing to drive demand and then also the continued build-out, as we mentioned on this call, of our e-commerce platform, so -- in local language sites and markets. And we've used some of our analytics and insights to determine what markets we build local language sites in, and we're going to continue to do that to make sure that we're addressing the consumer in a direct and relevant way.

[Operator:]

Our next question comes from the line of Wendy Nicholson with Citi. Please proceed with your question.

[Wendy Nicholson:]

I had a couple of questions sort of follow-up on the luggage launch. Number one, can you talk about luggage and the impact on gross margins? I know it's teeny tiny, but sort of structurally? Have you thought about -- how have you thought about the end of luggage on the gross margin kind of over the longer term to the extent it continues to grow? And then just going back, Matt, to your comments about inventory management on luggage, I totally get that you're in learning mode, but we checked the website often, and it just seems like so many of the SKUs, particularly on the backpack side, are just persistently out of stock. So do you risk alienating consumers, not being able to meet demand and people going elsewhere, et cetera, et cetera? How are you thinking about that just in terms of making sure you're sort of living up to the potential of the launch?

[Paul Carbone:]

I'll start with the gross margin and I'll talk bags overall, Crossroads bag, not specific to luggage, but crossroads bags in our, that category overall. So overall, as we think about bags, inside of Coolers & Equipment, gross margins are to the category in line, slightly accretive. So that's positive to the category. And just stepping back, as we think about -- and we've talked about this in the past, as we think about gross margins, our -- as we look at new products, the first past or the first thought gate isn't gross margins, right? Now as the CFO, I'll tell you, it's important to us, but that's not the driver. We fly to premium-priced brand. So we think about pricing, we think about pricing in the market, and then we work on the cost side as far as efficiency and things of that nature. But directly to your question, the bags gross margin is equal or accretive to Coolers & Equipment overall.

[Matt Reintjes:]

Okay. Wendy, to the question on the kind of conservative ramp of our suppliers, you're right. And as I said, we've gone in and out of stock. I'd ideally like to be in stock at all times. But I think the big thing for us is this is a new product family that we ramped and built through the COVID era, 100% remotely, ramping up a new supply chain in a new factory. And I think the team has done an incredible job of making sure that it delivered on all the things that was supposed to quality, the product, the design, getting the supplier up in a healthy way, and it's something we've done completely remotely. So we took a conservative approach to how that ramp-up happens to make sure that we weren't -- we put ourselves in a position where we ramp too fast, and we're restricted on how our team could directly engage as the world continues to reopen, as we can more actively and directly engage with our factories, we'll continue to turn that dial. We're focused on right now with our marketing around bags to continue to drive education and to drive awareness and to drive consideration so that as travel able starts to resume as we get into the summer and people, whether they take close in vacations or start to get back on airplanes we're top of mind. So we're not worried about a sale -- a lost sale in the near term. We're worried about engaging consumers who have a passion for the brand and understand the product being ready when we're fully in stock on the site.

[Operator:]

Our next question comes from the line of Sharon Zackfia with William Blair. Please proceed with your question.

[Sharon Zackfia:]

Two questions, Paul, I might have missed this, but did you quantify what you expect the logistics pressure to be this year now? And then secondarily, I guess, just given the strength you're seeing across channels and products and now globally, I mean, is 10% to 15% really the right long-term growth algorithm for the top line? Or are you guys now thinking you're sustainably somewhere higher?

[Paul Carbone:]

So, we didn't quantify the inbound freight. It's, I can tell you, it's slightly less than what we had for GSP. So it's in that ballpark. And the reason we didn't give an exact number as we think about GSP, if that gets passed, that will come back. I think the inbound freight is certainly for this year, as we look out at the market is here for the remainder of the year. It's a great question on top line and long term. And certainly, if you look at our history back 2018 plus 22% and a plus 17%, last year plus 19%, and we're 20% to 22% this year. Similar to gross margin, we are not ready to update our long-term outlook for sales, happy with the 20% to 22% this year and really the momentum behind the brand.

[Operator:]

Our next question comes from the line of Alex Maroccia with Berenberg. Please proceed with your question.

[Alex Maroccia:]

There's been a lot of news recently about Amazon, cracking down on counterfeit and low-quality products. Have you helped them at all with this initiative? And do you anticipate any material benefits coming from it?

[Matt Reintjes:]

Alex, it's a great question. We have talked in the past. We have a very active brand protection team. We've been very active domestically. We've been very active globally. One of the things that we announced in this respect, I think in June of 2019 was a partnership with Amazon as it relates to cracking down on party sellers of counterfeits. And so we joined with them in a unique program to focus on that. And then in addition, we scour both the domestic and global marketplaces and websites, and we've had a lot of success. I would say it's -- we wouldn't put it in in the numbers and say we can tease out the benefit from that from a sales perspective. We definitely believe it's important as we continue to defend our intellectual property defend our brand, and that's why we do it, but we have a good partnership there.

[Alex Maroccia:]

That's helpful. And then just a follow-up real quick on a lot of these supply questions that people have been asking about the luggage in particular, where is that currently manufactured? And do you think you can expand the manufacturing base to places like Eastern Europe or South America for it?

[Matt Reintjes:]

One of the things that we look at with our supply chain is a constant evaluation of the best locations to manufacture from a strategic perspective. We have a global supply chain from kind of now almost many points of the world across all of our products. I think as it relates to bags, in particular, we previously talked about -- those are products that we moved out of China primarily into other markets in Southeast Asia. There's a ready supply base for expansion. We're also are very happy with our current suppliers and believe that they can scale as we continue to scale and expand that product portfolio on growth. But we have a very active sourcing and supply chain, a very active and very talented team. That continues to make sure we're in the best places to manufacture our products, both for optimization of design and quality, but also logistics and delivery.

[Operator:]

Our next question comes from the line of Kaumil Gajrawala with Credit Suisse. Please proceed with your question.

[Kaumil Gajrawala:]

There's been a lot of questions. You've obviously put quite a bit of momentum, there's been a lot of questions on supply. Can you maybe just talk about how you're thinking about reopening and if it may be bending the arc of your growth in one direction or the other? And then how you'll manage supply around that?

[Matt Reintjes:]

Just to clarify, when you say reopening, are you talking specifically about the economic reopening we're seeing really everywhere may just be shifting what your growth looks like from what we just saw in this quarter versus what we might be looking at for the next year or so?

[Matt Reintjes:]

Yes, perfect. Thanks. I'd say when we think about the reopening, one of the things we said on previous calls, and I think it's a strong position for our brand and a strong position for product portfolios, we were able to evolve and take advantage of the pandemic as people were at home or they were more solo outdoor pursuits. As the world reopens and some level of normalcy comes back, whether those are commutes or group gatherings or sideline sports on the weekends, we think our brand is well positioned. We think our product is well positioned to follow the consumer. We're not a pickup and put down type of product portfolio or brand. So our coolers and our cups in our bags can travel with you as your kind of -- or as people's reopening evolution happens. So I think that's -- I think that's one of the things, and we talk a lot about this that We'll continue to adjust how we position and how we market to what's happening and where the consumer is at that point. We did it last year when it was highly disrupted and we'll do that as the world reopens.

[Kaumil Gajrawala:]

Okay. Got it. And then the improvement in gross margin from the reduction in product cost, is that a structural improvement, perhaps more intelligent ways of how you're tooling it? Or maybe raw material prices could you maybe provide a little more detail on what was behind that piece of the gross margin improvement?

[Paul Carbone:]

Sure. I'm going to start with what it is not. So what it is not is taking durability out of the product, taking quality out of the product, changing the spec for those items. That's what it is not. What it is a couple of things that you mentioned, it's efficiency, it is leveraging and I'll use this quarter as an example, leveraging our 42% top line growth to drive efficiencies to share in fixed cost leverage that our manufacturers would enjoy with that level of growth. It is operational in reducing scrap will give us product cost improvement. So it's all those different pieces that go into it. Again, what it's not is taking quality and durability out of the product.

[Kaumil Gajrawala:]

Okay, got it. So it sounds structural, not temporary. Is that fair?

[Paul Carbone:]

Yes.

[Operator:]

Our next question comes from the line of Kimberly Greenberger with Morgan Stanley. Please proceed with your question.

[Kimberly Greenberger:]

Okay. Great, I wanted to ask about revenue. And if there -- was any revenue -- you talked about that huge acceleration in the last three weeks of the quarter. Any revenue shifts, for example, out of Q2 into Q1 that might have distorted that growth rate? Or is it just simply that you're lapping the beginning of COVID last year, and that's what you're seeing as you begin to lap. And then my second question on revenue. I just want to make sure I heard you correctly, Paul. It sounds like you were saying second quarter revenue growth is expected to be higher than first quarter, with then easing growth in third quarter and again in fourth quarter, but still double digit in each of those two quarters. So if you could just make sure that my understanding if that's correct, that would be correct.

[Paul Carbone:]

Sure. Kimberly, I'm going to start with your second question first. So what I said was of the remaining three quarters, so going forward, second quarter would be the highest growth rate. And then the second half would still be double digits. So I wasn't comparing it to the first quarter as comparing the last three quarters relative to each other. And then on your first question about the first 10 weeks and then the last three, that wasn't anything on shifting of timing. It was really just to give investors and all of you a look at our pre-COVID impact versus our post COVID impact as we did last year in the first quarter. So before we were rolling over shutdowns, we were plus 36%. So what I wanted to share with all of you this wasn't a driven by the last three weeks, certainly higher than the first 10 weeks, but this was in the last three weeks driving the quarter. We were plus 36% going into when we started lapping those shutdowns.

[Operator:]

Our final question this morning comes from line of John Kernan with Cowen. Please proceed with your question.

[John Kernan:]

Excellent quarter, so most of my questions have been answered. I'm just curious, in terms of the upside in Q1 and the guidance increase for the year, Q1 is your by far your smallest quarter of the year from a revenue perspective. What's driving the upside for the full year guidance and really upside in Q1? Is there any specific category, geography product that came in above expectations? And anything we should look for the remaining nine months from a brand activation standpoint, a marketing standpoint that you're looking forward to?

[Paul Carbone:]

Yes. So I'll start. I'll link quarter results to your question on the balance of the three quarters. The results in the first quarter were broad-based. And as we look out at the year, we continue to see from the first quarter, strong demand for the brand. And if you look at our outlook, with the first quarter, we now expect the balance of the year to be into -- in that -- if you do the math, 16% to 18%, so slightly above our full year guide of 15% to 17%. And it's really that strength that we've seen in Q4 that we saw in 2020, but it is broad-based demand for the brand. And I'll let Matt hit the second piece of that question.

[Matt Reintjes:]

So the biggest thing that we're prepared for a world that's going to reopen a bit more through the summer and hopefully through the fall, which the -- the biggest evolution there is we spent last year once the pandemic in a highly digital world, engaging consumers in a digital way. One of the things we look forward to this year is when it's possible and when it's safe to start driving some of our off-line reengagement with consumers and customers and getting out there as activities start to resume, as gatherings start to happen. And so we've got a team that's that has kind of a dual track plan on the brand activation and marketing side, both domestically and globally, which is we'll continue to operate, we believe, successfully in this digital world, but the minute we can start getting people back out and activating events, engaging with some of the incredible partners we have as they bring back their events, we're pretty excited to do it.

[Operator:]

Thank you. Ladies and gentlemen, that concludes our question-and-answer session. I'll turn the floor back to Mr. Matt Reintjes for the final comments.

[Matt Reintjes:]

Thanks, everyone, for the time this morning. Look forward to updating you as we come back together for our Q2 call.

[Operator:]

Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.