Solo Brands, Inc. reported significant financial challenges for the three and nine months ended September 30, 2024, compared to the same periods in 2023. Net sales decreased to $94.1 million for Q3 2024, down 14.7% from $110.3 million in Q3 2023. For the nine months, net sales totaled $311.0 million, a decline of 5.6% from $329.5 million in the prior year. This drop was attributed to decreased demand in the direct-to-consumer (DTC) channel and a non-recurring transaction with a marketing barter partner that positively impacted retail sales in the previous year.

Gross profit also suffered, falling to $39.3 million in Q3 2024 from $68.3 million in Q3 2023, marking a 42.4% decrease. The gross margin for the quarter was 41.8%, down from 61.9% a year earlier. For the nine-month period, gross profit decreased to $172.5 million from $205.7 million, with a gross margin of 55.5%, down from 62.4%. The company recorded an $18.7 million inventory write-down, which negatively impacted gross margins.

Operating expenses surged, with total operating expenses for Q3 2024 reaching $154.6 million, compared to $69.6 million in Q3 2023. This increase was driven by restructuring, contract termination, and impairment charges totaling $83.6 million for the nine months, a stark rise from $4.3 million in the prior year. Notably, the company recognized a $25.0 million goodwill impairment charge related to the Solo Stove reporting unit.

Net loss for Q3 2024 was $(111.5) million, a stark contrast to a net income of $3.1 million in Q3 2023. For the nine months, the net loss was $(122.0) million, compared to a net income of $15.5 million in the same period last year. The loss per share for Q3 2024 was $(1.19), compared to earnings of $0.07 per share in Q3 2023.

As of September 30, 2024, total assets decreased to $553.2 million from $659.3 million at the end of 2023. Total equity also fell significantly to $250.0 million from $372.3 million. Cash and cash equivalents were reported at $12.5 million, down from $19.8 million at the end of 2023.

In response to these challenges, Solo Brands implemented a strategic plan that included management changes and the termination of underperforming marketing agreements, resulting in a total expense of $21.6 million in Q3 2024. The company is also focusing on restructuring efforts to improve margins and leverage combined scale for growth, particularly following the underperformance of the IcyBreeze product line, which led to significant impairment charges.