Traeger's (COOK) Q2 2025 Earnings Miss and Strategic Cost-Cutting Amid Tariff Pressures: Can Project Gravity Spark a Turnaround?

Traeger Inc. (COOK) has stumbled into a rough patch. Its Q2 2025 earnings report was a seismic miss, with revenue falling 13.6% year-over-year to $145.5 million—well below the $169.8 million Wall Street expected. The company posted an adjusted net loss of $0.01 per share, a stark contrast to the $0.05 profit forecast. This isn't just a quarterly hiccup; it's a red flag in a market already grappling with tariffs, soft demand, and margin compression. But buried in the gloom is a glimmer of hope: Project Gravity, Traeger's $30 million cost-cutting initiative. The question now is whether this aggressive restructuring can reignite growth in a sector where Traeger's dominance is under threat.

The Earnings Miss: A Harsh Reality Check

Traeger's Q2 results were a masterclass in how macroeconomic headwinds can derail even the most iconic brands. Grill sales plummeted 21.9% year-over-year to $74.2 million, dragged down by a shift in consumer preferences toward lower-priced models and a saturated market. While consumables (wood pellets) rose 7.5%, this growth was offset by a 11.9% drop in accessories revenue, particularly in the struggling MEATER smart thermometer business. Gross margins contracted to 39.2% from 42.9%, hit by tariffs, promotional discounts, and a shift to domestic fulfillment.

The company's full-year guidance—$540–$555 million in revenue—falls short of the $604.4 million Wall Street expects, signaling a 10%+ decline in 2025. Adjusted EBITDA is projected at $66–$73 million, down from $27 million in the same period last year. Traeger's cash reserves have shrunk to $10.3 million, and inventory has ballooned to $115.8 million, raising concerns about overstocking and weak demand.

Project Gravity: A Lifeline or a Hail Mary?

Traeger's response to these challenges is Project Gravity, a two-phase cost-cutting plan aimed at saving $30 million annually by 2026. Phase one includes layoffs, the closure of MEATER's UK office, and integrating MEATER operations into Traeger's Salt Lake City infrastructure. These moves are expected to offset 80% of the $60 million in unmitigated tariff exposure for FY25. Phase two involves a broader operational review, with the goal of streamlining supply chains and reducing overhead.

The initiative is bold, but execution is everything. Traeger must balance cost-cutting with innovation. For example, the recent launch of the Woodridge grill—a $1,150 model praised for its design and smart features—shows the company hasn't lost its touch for product innovation. However, if Project Gravity disrupts R&D or delays new product launches, Traeger could lose ground to competitors like Weber and Pit Boss.

The Tariff Tightrope: Can Traeger Navigate Global Trade Chaos?

Tariffs are a double-edged sword for Traeger. The company has already absorbed $3 million in tariff costs in Q2 and expects $60 million in annualized exposure. While Project Gravity aims to mitigate 80% of this, global trade policy remains unpredictable. Traeger's pivot to domestic manufacturing is a step in the right direction, but scaling production in the U.S. could strain margins further.

Investors should watch how Traeger balances pricing strategies. Raising prices to offset tariffs risks alienating price-sensitive customers, while maintaining low prices could erode margins. The company's ability to hedge against tariffs through supplier diversification and localized manufacturing will be critical.

Market Reaction: A Stock at a Crossroads

Traeger's stock fell nearly 22% in after-hours trading after the earnings report, despite a 3.03% post-earnings rebound. The stock is currently trading at $1.70, down 29% year-to-date but up 30% over the past three months. This volatility reflects investor uncertainty: Is Traeger a value trap, or is the market underestimating the potential of Project Gravity?

The Verdict: A High-Risk, High-Reward Play

Traeger's Q2 results are a wake-up call, but they also highlight the company's resilience. The Woodridge grill and strategic partnerships with Bud Light and Pepsi Frito Lay suggest Traeger is still a brand with staying power. However, the road to recovery is fraught with risks:

1. Execution Risk: Project Gravity's success hinges on Traeger's ability to cut costs without sacrificing innovation or customer experience.
2. Demand Uncertainty: The grilling market is maturing, and Traeger's reliance on core grill sales makes it vulnerable to shifting trends.
3. Tariff Volatility: Global trade policy could shift overnight, impacting Traeger's margins and cash flow.

For investors willing to take a calculated risk, Traeger's current valuation—trading below its fair value and with a P/E ratio of just 5—offers a compelling entry point. But this is not a buy-and-hold stock. Closely monitor key metrics:
- Adjusted EBITDA growth: Can Traeger hit its $66–$73 million target?
- Inventory turnover: Is overstocking a temporary issue or a sign of deeper demand weakness?
- Tariff mitigation: Will Traeger's supply chain diversification pay off?

If Project Gravity delivers on its promises and Traeger can regain pricing power, the stock could rebound. But if the company falters, the downside is steep. For now, Traeger is a high-risk, high-reward bet—a stock for the bold, not the faint of heart.