(BFM Bourse) – From a rudimentary and static brick oven, Weber has transformed the barbecue into a formidable marketing tool, promoting a leisurely lifestyle around a good meal with friends. If the pandemic avait relaunched the sales of the Rolls-Royce des grillades, l’engouement pour le produit phare de Weber a depuis bien baissé… Le titre a d’ailleurs perdu plus 60% de sa valeur depuis son introduction en Bourse a year ago.
Weber. Only the evocation of the brand resonates as an invitation to enjoy grilled meat under the sun. For more than 70 years, the company founded by George Stephen has delighted the taste buds of fans of meat and other grilled dishes around the world.
In France, barbecue has over the years become a hobby in its own right to the point where 63% of French households are equipped with it, according to a BVA survey for barbecue brand Weber. In the United States, the barbecue or barbecue is an institution and is an integral part of the culture of the country with the starry banner. It is also on the other side of the Atlantic that Weber was born, the undisputed leader of the barbecue whose full name Weber-Stephen Products refers to George Stephen, a steel plate assembler at the Weber Brothers Metal Works factory. This father of twelve children, a fan of large family grills, was obsessed with developing the perfect cooking appliance, efficient in all climates and safe.
Legend has it that it was by assembling large steel plates into hemispheres to produce nautical buoys for Lake Michigan (or by observing a metal beacon, during a sailing trip, as you wish) that he came up with the idea of a round barbecue with a top The Original Kettle (or Weber Kettle) was born, and George Stephen set out to travel the country to promote his invention. The success was quick because the comments were unanimous: maintaining a uniform heat inside the barbecue provides better cooking quality. Charcoal, gas or electric barbecues, already connected, the group has subsequently developed wide ranges of household appliances as well as a range of accessories and consumables (representing 26% of its income).
Barbecues that sell less
Weber is banking on average annual revenue growth of 10% between 1980 and 2021. It was thanks to this tantalizing story that the barbecue king showed up on Wall Street last year, with ambitions to raise nearly $800 million. However, the barbecue manufacturer has not had a success to match its notoriety. Weber was forced to lower his claims to ensure a successful initial public offering. The group will only manage to raise $250 million, less than a third of what it initially expected, while the listing price was set below the initial price range of between $15 and $17.
Therefore, at a price of 14 dollars, Weber took its first steps in the stock market on August 6, 2021. The first listings of the security occurred in good conditions with a share that soared 18%. Weber’s capitalization then reached $4.7 billion.
After a months-long stock market honeymoon — Weber shares still peaked at $17 in October 2021 — market interest in the barbecue king has waned over the quarters. The barbecues that made it famous are no longer selling like hot cakes. This is demonstrated by the last quarterly update published by the group at the end of July. In the latest quarter, Weber’s net sales fell 7% and its net loss was $51 million, compared to net profit in the same period a year ago. The Palatine, Illinois-based company also suspended its quarterly dividend.
The culprit for this evaporation of sales has all been found: inflation that diverts consumers from their flagship barbecues, dedicating more and more of their budget to basic necessities. In this inflationary context, Weber foresees a further drop in sales in the third quarter, which will push its CEO to resign.
Exactly one year after its IPO, the stock market balance of the barbecue king is, therefore, far from inflaming the rating. Weber shows a drop of more than 60% of his title over a year, highlighting a market capitalization reduced to 2,000 million dollars. That’s nearly $3 billion vanished in the space of a short year…
Sabrina Sadgui – ©2022 BFM Bourse
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