Yowie Group back on the path to outperformance

Yowie Group ASX YOW increase global sales distribution six months
Yowie Group turned its fortunes around during the second half of the 2018 financial year.

It has been a topsy-turvy six months for Yowie Group (ASX: YOW), a Perth-based company behind the Yowie brand of chocolates and products.

The brand revolves around six Yowie characters that inspire a range of products that “promote learning, understanding and engagement with the natural world”.

Earlier today, the company announced it had achieved revenue guidance, increased its global net sales and expanded distribution in the past six months, as part of a sales update that precedes the company’s full-year report to be published in August.

Yowie says that it has achieved a number of positive metrics including meeting its previous estimates and recording a strong performance rebound after seeing previous chief executive officer Bert Alfonso walking the plank in January this year – a move that was expected to prompt a turnaround in the fortunes of the chocolatier-brand.

From red to black

In January this year, Yowie cut its sales guidance for the 2018 financial year from 55% to 17% with its former North American chief Mark Schuessler taking over the reins from Mr Alfonso in a desperate bid to arrest company’s lagging sales and disappointing performance.

Less than six months and various “efficiency improvements” later, Yowie says it is back among strong sales in the latest quarter to end the financial year.

In its sales update, Yowie outlined that it has achieved its annual sales guidance with US distribution and market share “continuing to increase”.

Yowie reports that its “margins remain healthy in excess of 50%” and added that management is focused on “continuing cost reduction efforts beyond what has been achieved to date to improve margins”.

“We are pleased to finish the year with strong fourth quarter results and achieve annual revenue guidance. We are making good progress in broadening our distribution network and growing market share. We enter financial year 2019 with momentum and confidence,” says Mr Schuessler.

Fourth quarter recorded net sales for Yowie A$5 million, an 18% increase on the previous corresponding quarter.

Meanwhile, group net sales for the 2018 financial year were A$19.6 million, slightly above the 2017 period.

Yowie’s prime market – North America – achieved a net sales figure of $A4.8 million in the past quarter, an increase of 38% versus the prior corresponding period. In the second half of the 2018 financial year, Yowie’s North American net sales were $8.5 million – an increase of 3%.

According to Yowie, the higher market traction in the past six months was due to increased US distribution across all channels, stabilising sales at its largest US customer, and additional promotional activity.

Another important caveat to Yowie’s performance has been distribution.

The company said it continues to grow its US distribution by adding key accounts in all channels including grocery and convenience.

Yowie also pointed the percentage of stores carrying Yowie (as reported by Nielsen) had increased to 44.5% from 36.7% in the past year. Nielsen also noted that Yowie US market share stands at 0.8845%, an increase of 0.0124%.

In Australia, Yowie achieved net sales of A$2.7 million in the past financial year, an increase of 44%.

Today’s sales update helped Yowie’s shares to post a 32% gain by mid-afternoon trade, where they were trading at A$0.10.

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