Trading Ideas| What CELH Undergos?

Hello everyone! Today i want to share some trading ideas with you!

My perspective on $Celsius Holdings, Inc.(CELH)$ problem 👇

Celsius's business model primarily depends on bulk purchases by $PEP, who then distributes the products to retailers. This quarter, however, Pepsi's orders have significantly decreased, with purchases dropping to about $130M from $212M in the same period last year. This reduction is attributed to Pepsi's management of its existing inventory levels, rather than a decline in consumer demand for Celsius products. Supporting this view, retail data indicates a positive trend -- a 10% increase in direct sales from stores this quarter.

This scenario is actually more normal than most would think in a consumer brand product cycle -- here are a 3 examples that went through what Celsius is experiencing right now 👇

1. $Mattel(MAT)$ & $Wal-Mart(WMT)$

• In 2009, Mattel faced order reductions from Walmart, one of its key retailers, after the retailer found itself with excess inventory post-holiday season. Walmart’s order reductions were a response to higher than anticipated leftover inventory, requiring a period to normalize stock levels before resuming regular order volumes -- this situation did not reflect a drop in consumer demand for Mattel's toys but rather a temporary adjustment in Walmart’s inventory management.

2. $GoPro(GPRO)$ & $Best Buy(BBY)$

• GoPro experienced temporary order reductions from Best Buy, one of its largest distributors, in 2016. Best Buy adjusted its inventory strategy after overestimating demand for GoPro cameras during the holiday season, leading to an excess of unsold stock -- as a result, Best Buy temporarily reduced its orders from GoPro to clear out inventory.

3. $Deckers Outdoor(DECK)$ & $Nordstrom(JWN)$

• Deckers, known for its UGG boots, experienced a temporary reduction in orders from Nordstrom, which had overestimated winter sales and ended up with excess inventory. Nordstrom temporarily slowed its orders to adjust stock levels, which impacted Deckers' sales figures -- This adjustment was purely due to inventory management decisions rather than any actual fall in consumer demand for UGG products.

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