(BFM Bourse) – From a primitive and static brick oven, Weber has turned barbecue into a formidable marketing tool, promoting a fun lifestyle around a good meal with friends. Si la pandémie avait relancé les ventes de la Rolls-Royce des grillades, l’engouement pour le produit phare de Weber a depuis bien baissé… Le titre a d’ailleurs perdu plus de 60% de sa valeur depuis son introduction en Bourse a year ago.
Weber. The mere evocation of the brand reverberates like an invitation to enjoy grilled meat in the sun. For more than 70 years, the company founded by George Stephen has been delighting the taste buds of aficionados of meat and other grilled dishes all over the world.
In France, barbecue has over the years become a hobby in itself to the extent that 63% of French homes are equipped with it, according to a BVA survey of barbecue brand Weber. In the United States, a barbecue or barbecue is an institution and is an integral part of the country’s culture with the star-studded pennant. Across the Atlantic, too, was born Webber, the undisputed leader of barbecue whose full name Webber-Stephen Products refers to George Stephen, a steel plate assembler at Webber Brothers Metal Works. A fan of big family grills, this father of twelve was obsessed with developing the perfect cooker, effective in all weather conditions and without risk.
Legend has it that by assembling large steel plates in both hemispheres to produce sea buoys for Lake Michigan (or by observing a metal beacon, during a sailboat cruise, as you wish) came the idea of a circular barbecue with a lid. The Original Kettle (or Weber Kettle) was born, and then George Stephen took a trip around the country to promote his invention. The success was rapid because the comments were unanimous: maintaining an even temperature inside the grill provides better cooking quality. Charcoal, gas or electric grills, now connected, the group later developed a wide range of appliances as well as a range of accessories and consumables (which account for 26% of its income).
Barbecues that sell for less quality
Webber boasts an average annual revenue growth of 10% between 1980 and 2021. Building on the strength of this enticing history, the King of Barbecue presented itself on Wall Street last year, with the ambition of raising nearly $800 million. However, the grill manufacturer has not had success to match its bad reputation. Webber was forced to reduce his claims to ensure a successful IPO. The group will only be able to raise $250 million, less than a third of what the group initially hoped for, while the listing price is set below the initial price range of $15-17.
So, at $14, Webber took his first steps in the stock market on August 6, 2021. The first quotes from the title were made under good conditions with a share that rose by 18%. Then Weber’s capitalization amounted to $4.7 billion.
After a stock market honeymoon that lasted a few months — Weber stock still peaked at $17 in October 2021 — market interest in the king of barbecue faded over the quarters. The barbecues that made them famous no longer sell like hot cakes. It is evident from the latest quarterly update published by the group at the end of July. Last quarter, Weber’s net sales fell 7% and its net loss was $51 million, compared to a year-earlier net profit. The Illinois-based Palatine Corporation has also suspended its quarterly dividend.
The reason for this evaporation in sales is found: inflation that diverts consumers from the main barbecues, allocating their budget more and more to basic everyday products. In this inflationary context, Webber expects a further decline in sales in the third quarter, which prompted its CEO to resign.
One year after the day after the IPO, the stock market balance sheet for the king of barbecues is far from fueling the rating. Weber shows a drop of more than 60% of its title over the course of one year, highlighting a drop in market capitalization to $2 billion. That’s nearly $3 billion going up in smoke in a short year…
Sabrina Sadgui – © 2022 BFM Bourse