(BFM Bourse) – From a rudimentary and static brick oven, Weber has transformed the barbecue into a formidable marketing tool, promoting a pleasant lifestyle around a good meal with friends. If the pandemic had revived sales of the Rolls-Royce of grills, the craze for Weber’s flagship product has since declined … The title has also lost more than 60% of its value since its IPO one year ago.
Weber. Just the evocation of the brand resonates like an invitation to enjoy grilled meats under the sun. For more than 70 years, the company founded by George Stephen has been delighting the taste buds of meat aficionados and other grilled dishes around the world.
In France, the barbecue has become over the years a hobby in its own right to such an extent that 63% of French homes are equipped with it, according to a BVA survey for the Weber barbecue brand. In the United States, the barbecue or BBQ is an institution and is an integral part of the culture of the country with the star-spangled banner. It is also across the Atlantic that Weber was born, the undisputed leader of the barbecue whose full name Weber-Stephen Products, refers to George Stephen, assembler of steel plates in 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 weathers and without danger.
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 sailboat trip, as you wish) that he was came the idea of a round barbecue with a lid. The Original Kettle (or Weber Kettle) was born, and George Stephen then set out to travel the country to promote his invention. Success was quick because feedback was unanimous: maintaining even heat inside the barbecue provides better cooking quality. Charcoal, gas or electric barbecues, and now connected, the group has subsequently developed wide ranges of appliances as well as a range of accessories and consumables (which represent 26% of its income).
Barbecues that sell less well
Weber boasts an average annual revenue growth of 10% between 1980 and 2021. It was on the strength of this enticing history that the king of the barbecue presented itself on Wall Street last year, with the ambition of raise nearly $800 million. However, the barbecue manufacturer has not met with success to match its notoriety. Weber was forced to lower his claims to ensure a successful IPO. The group will only manage to raise $250 million, less than a third of what the group initially hoped for, while the listing price was set below the initial price range of between $15 and $17.
It was therefore at a price of 14 dollars that Weber took its first steps on the stock market on August 6, 2021. The first quotations of the title took place under good conditions with a share which soared by 18%. Weber’s capitalization then reached 4.7 billion dollars.
After a stock market honeymoon of a few months – the Weber stock still peaked at 17 dollars in October 2021 – market interest in the king of barbecues has withered over the quarters. The barbecues that made it famous no longer sell like hot cakes. Evidenced by the last quarterly update published by the group at the end of July. In the past quarter, Weber’s net sales fell 7% and its net loss was $51 million, compared to net profit for the year-ago period. The Palatine, Ill.-based company also suspended its quarterly dividend.
The culprit of this evaporation of sales is all found: inflation which diverts consumers from its flagship barbecues, their budget being more and more dedicated to essential daily products. In this inflationary context, Weber anticipates a further decline in sales in the third quarter, pushing its CEO to resign.
One year to the day after its IPO, the stock market balance sheet of the king of the barbecue is therefore far from inflaming the rating. Weber shows a fall of more than 60% of its title over one year, highlighting a market capitalization reduced to 2 billion dollars. That’s nearly 3 billion dollars gone up in smoke in the space of a short year…
Sabrina Sadgui – ©2022 BFM Bourse