Dive Brief:
- Solo Brands, owner of Chubbies and Solo Stove, received a noncompliance notice from the New York Stock Exchange, the company said in a Thursday press release.
- The NYSE issued the notice because the company’s Class A common stock fell below $1.00 per share over a consecutive 30-day trading period.
- The company has six months to bring its share price into compliance with the minimum share price requirement. Its stock will remain available on the market during that period.
Dive Insight:
With an imminent leadership change and falling sales, Solo Brands’ latest challenge is a potential stock exchange delisting. However, the NYSE’s notice does not impact Solo Brands’ business operations and doesn’t trigger any violation of its debt obligations, the company said.
Solo Brands can regain compliance if its Class A stock has a closing share price of at least $1.00 and an average closing share price of at least $1.00 over a 30 trading-day period. The company may enact a reverse stock split to regain compliance, subject to approval by its board of directors and stockholders.
Solo Brands recently announced that CEO Chris Metz will exit the role on Friday and vacate his seat on the company's board of directors, bringing his roughly 13-month tenure with the company to a close. John Larson, who is a member of the company’s board of directors, has been appointed interim president and chief executive officer.
In its Q3 earnings reports, the company reported a 14.7% decline in net sales year over year to $94.1 million. Its direct-to-consumer revenue fell 15.5% from last year to $64.5 million. The company swung to a net loss of $111.5 million compared to a net income of $3 million in the year-ago quarter.
Metz at the time attributed the earnings results in part to macroeconomic conditions affecting consumer purchasing behavior.
“Our third quarter results were in line with our expectations despite a continued challenging macroeconomic backdrop for big ticket consumer durable items," Metz said in a statement. “We continue to see strong momentum and excitement from our retail partners; however, as expected, sales in our direct-to-consumer channel were challenged. During the quarter, we took decisive measures to address factors that were hindering our growth, and as a result of these actions, we believe that we are well positioned moving forward.”
Last January Solo Stove launched a marketing campaign featuring rapper Snoop Dogg as its official “smokesman.” As part of the campaign, Snoop Dogg posted a cryptic post on social media claiming to be giving up smoke, but ultimately directed consumers toward the brand’s smokeless fire pit. The campaign generated a burst of media coverage and social engagement, but didn't deliver a sales boom.
