In January, Yowie Group Ltd (ASX: YOW) posted a positive announcement regarding Nielsen scan data results for its 'front end' (i.e., on store shelves) sales performance for the 13 weeks to December 26, 2015.
At the time, Yowie was the #1 Novelty candy item, and #8 overall top-selling front end candy item. It was also the sixth most popular convenience store item, despite tiny distribution. Yowie today announced an update for front-end sales performance for the 52 weeks to 26 March, 2016, and the results have beaten the company's previous achievements.
Yowie is the:
- #1 selling novelty candy item in the US market for the 52 weeks to 26 March 2016
- #3 selling item in total US candy market for the 52 weeks to 26 March 2016
- #1 selling item in dollar sales per convenience store per week for the 13 weeks to 26 March 2016
- #9 selling chocolate candy in the US single-serve immediate consumption convenience store market, for the 13 weeks to 26 March 2016
So What?
A solid improvement and no mean feat, although the 'newness' of Yowie's offering undoubtedly helped it beat out stalwarts like Snickers and M&Ms – as did the recent festive and Easter seasons. I also note that convenience store sales appear to have declined, although Yowie is only placed in 3.7% of US convenience stores.
What investors need to ask themselves is if today's announcement materially de-risks the company. In my opinion, it does not. It's great to see that Yowies continue to sell well, and today's announcement prevents the addition of a further risk (e.g., if sales were slowing), but that's all.
Major risks still remain around spending, ongoing litigation, other potential litigation, pending patent approval, and of course, competition. Yowie could also improve its market transparency, with the company often choosing to focus on presenting its sales in 'retail sales value' (the cost of Yowies on the store shelf) rather than their actual sales value to Yowie.
As things stand, today's announcement is a positive development and I continue to believe Yowie is a decent value, albeit a riskier investment.
