Yowie delivers higher global net sales
“Overall, the quarter sales were solid due to the Australian and Canadian additions to the portfolio. We are seeing encouraging results in the commitment in new distribution in the US, Australia and Canada,” Louis Carroll, chairman of Yowie Group said.
“While we prudently invest for growth we are also intensifying our efforts to ensure Yowie is efficient and costs are managed very carefully. The significant cost reductions are detailed above. We look forward to delivering on full year net sales guidance, delivering a stronger second half of the year and restoring shareholder confidence.”
The chocolate giant said in a statement their financial results for the second quarter reflect continuing investments in distribution expansion, sales and marketing, and positive impacts of reversals of asset impairment and share based payments.
Yowie’s net operating cash outflow was $1.89 million, with cash receipts of $4.86M, offset by raw material and operating costs of $3.34M, marketing costs of $1.12M and staff, administrative and corporate costs of $2.23M. They also saw a one time charge related to a stock adjustment at their largest customer. Cash levels are a strong $22.7M.
They are improving distribution across all channels in the US, Canada and Australia with more competitive promotional and merchandising activity to engage retailers and provide the consumer easier access to Yowie. They are improving product design and supply chain efficiencies to improve the bottom line. Corporate infrastructure is being restructured to maximize retail, broker and distributor touchpoints, take advantage of their team’s experience and reduce administrative costs.
“The Australian market continues to perform well with retailers engaged and happy with sustained progress. We are preparing for a pre-Easter launch of Series 2 – the Ranger Series and we anticipate more distribution as the product performs to expectations. We continue to expand distribution throughout Australia and we anticipate growth in New Zealand in Q3 as well,” said Yowie in a statement.
Yowie North America market share as reported by Nielsen for the 52 weeks ending December 2, 2017, AOC (TMeXtended All Outlet Combined) plus Convenience was .494%, a slight decline versus .503% pcp. They are showing strong gains in all distribution channels the past 52 weeks, with accelerating increase the last quarter in Convenience (+3.1% ACV) and Food (+5.4% ACV), both focus channels for us. But at 37% ACV distribution, they have a great scope to expand the availability of Yowie.
They have commitments for Q3 and Q4 from retailers totaling in excess of 15,000 outlets across all channels of trade, including Target, Safeway and Giant Eagle expansion; 7-11, Circle K, Speedway and Travel Centers of America; Bed, Bath and Beyond and Five Below. Yowie is also gaining commitments from Canada’s largest Drug chain, major convenience and petrol chains, grocery and specialty. They will see accelerated build into the market in Q3 and Q4.
“We have restructured our supply chain personnel to better manage our production and materials management in cooperation with the manufacturing facility. Inventory levels are sufficient to service our customers at the highest level and we are evaluating cost savings opportunities to eliminate inefficiencies as we grow. In light of the recent stock adjustment at our biggest retail customer, our focus is to make changes in packaging and the supply chain to eliminate issues going forward,” said Yowie in a statement.
The chocolate giant said the Q2 marketing focus was the Fall Campaign for the Series 3 launch into the US market. The total campaign reached 119 million impressions, surpassing our target of 95 million. The campaign also had 15 million Facebook views, our biggest to date. In terms of social media, their worldwide Instagram account hit record numbers thanks to content strategy, proactive engagement and a continual analysis of the most effective areas to invest.
Yowie will report results for the first half of FY18 to the ASX in the week commencing February 19.