What happened

Shares of Yeti Holdings (YETI 0.19%) are falling today, down by 17% as of 12:58 p.m. ET after the company reported disappointing earnings results for Q2.

Sales growth was consistent with the last two quarters, coming in at 17% year over year. But management noted that elevated operating costs relating to higher fuel prices impacted profitability. 

So what

Higher logistics and distribution costs are the only negatives from the earnings report. These headwinds caused gross margin to fall over 6 percentage points. This translated into an 18% drop in net profit on the bottom line. Other than that, Yeti is performing well.

As evidenced by its rising sales, demand for the company's products is strong. Some retailers are reporting a sharp deceleration in revenue growth around the start of the third quarter, but Yeti's new products have resulted in sustained demand in the near term.

Now what

Management is calling for more growth, with revenue expected to increase between 15% and 17% in the third quarter. While this is a downward revision from the previous forecast for an 18% to 20% boost, investors should be pleased with double-digit growth.

As for costs, management has already seen signs of cost decreases in transportation, which should allow gross profit to recover through the end of the year. 

Overall, the market is reacting to short-term conditions that have no bearing on Yeti's long-term opportunity to expand its business and deliver shareholder returns. Investors should be prepared for anything in this fluid business environment, but so far, Yeti is standing tall -- and could be a sleeper growth story worth checking out.