Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Management attributed the 4.1% consolidated sales decline to softening Direct-to-Consumer (DTC) trends in June and July, which offset growth in retail and international channels.
The Solo Stove segment faced a 14.7% sales decline, though management highlighted that new product launches accounted for nearly half of the segment's DTC sales. Operational efficiency was a primary focus, with management reducing the U.S. distribution footprint from five facilities in 2025 to just one by the fourth quarter of 2026. The Watersports segment was established as a separate reporting unit following a 59% sales increase, driven by strong retail point-of-sale demand for Oru and ISLE brands.
Profitability improved through a 25.5% year-over-year reduction in operating expenses, achieved via personnel actions and disciplined marketing spend. Management transitioned Oru manufacturing from a Mexico-based facility to a sourcing model to improve long-term costing and fulfillment efficiency. The fall and holiday strategy relies on a robust product pipeline, including the Infinity Flame propane pit, an indoor chiminea, and a new denim line for Chubbies.
International expansion is viewed as a 'blue ocean' opportunity, with management utilizing a capital-efficient distributor model to enter Europe, the UK, and Asia. Guidance assumptions include a continued focus on aligning the cost structure with revenue trends to protect margins during the ongoing DTC softening. Management expects to invest $2 million to $3 million in growth capital for the remainder of the year, primarily dedicated to product innovation.
The international strategy aims to leverage markets without U.S. tariff burdens to potentially offset the costs of third-party distribution partners. Gross margins were impacted by a $1.4 million raw material inventory write-off related to the closure of the Mexico manufacturing facility. The company recorded $2.4 million in out-of-quarter tariff refunds, which served as a temporary tailwind to gross margins during the period.
Management flagged the evolving tariff environment as a persistent factor requiring active margin protection strategies. A transition to a leaner SG&A run rate is expected to persist until the company anniversaries its recent restructuring actions next year. Nvidia-level potential. 30M+ investors trust Moby to find it first.
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