Yowie gets AFL, Rugby League and Bluey merchandising contracts but struggles with sales in the US

In 2021, locals reported spotting a Yowie—a mythical Bigfoot-esque creature—in Queensland. Whether the hairy creature is real is uncertain, but what’s very real and tangible is confectionary company Yowie’s (ASX: YOW) ASX comeback with a massive portfolio.

To begin with, Yowie has secured a sweet deal with the Australian Football League. As part of the agreement, Yowie will produce the Large Chocolate Football Easter Egg for the AFL. The contract expires on October 31, 2024. The AFL license is not exclusive and cannot be transferred, allowing the Company to use the Licensed Property for a specific period. This usage is restricted to producing the Licensed Commodities and selling them within the designated Territory.

Another contract is with the Australian Rugby League Commission (ARLC). The ARLC has onboarded Yowie to produce Yowie Confectionary in Australia and New Zealand till October 2024. 

Finally, Yowie has entered into a License Merchandise Agreement with BBC Studios Australia (BBCS), which grants the Company the authority to create, produce, and market Bluey Seasonal Confectionery for both Easter and Christmas. This agreement covers sales within Australia and New Zealand, and it extends until 30 June 2026. Bluey is a popular children’s television program in Australia.

Yowie plans to launch its first Bluey Seasonal Confectionery product in early 2024, just in time for Easter. This product offer will be available at major retailers in Australia, including Woolworths, Coles, and 7Eleven. 

The portfolio agreements follow standard commercial terms and conditions, granting the Company non-exclusive merchandising rights for the Bluey brand, the AFL, and ARLC. As per these agreements, Yowie is obligated to make minimum guaranteed payments or license fees, which could amount to a total of $1 million during the term of these agreements.

Besides the new agreements, Yowie’ Managing Director and Global CEO, Mark Schuessler, retired from his roles on July 24, 2023. Schuessler had joined the Company in June 2016 as Chief Operating Officer and was appointed Managing Director and Global CEO in January 2018.

The contracts are not just good but timely agreements, especially given the Company’s quarterly results. 

In Q4 FY23, the Group net sales were $3.9 million, 31% down on Q4 FY22. Its year-to-date sales totaled $19.7 million, a decline of 15% on pcp. Overall, Q4 sales were down 31% versus prior year due to softness in core product both in the US and ANZ.

The Company reported an EBITDA loss of $968k, an increase from Q4 FY22’s loss of $779k. Its year-to-date EBITDA loss stands at $1.68 million. The quarter and YTD profitability decline is attributed to the sales decline and increased legal costs related to the Whetstone settlement, where the court awarded Whetstone $170.7k plus interest over two partially-paid invoices but rejected all other cases Whetstone made against Yowie. 

Net cash for the quarter decreased by $497k, and YTD net cash has decreased by $1.1 million.

The unfavourable trend observed from Q1 to Q3 persisted as consumers and retailers adopted a cautious stance towards discretionary spending amid economic uncertainty. That’s why Yowie is focusing on introducing new product lines, especially seasonal offerings, and exploring fresh licensing prospects.

Despite the new deals, shareholders are on the fence about the Company’s performance—much like with Yowie’s existence—due to Yowie’s less than ideal quarterly results. Since the announcement, Yowie’s share price declined by over 13%. As economic pressures remain, there’s no telling what FY24 holds for Yowie, but hopefully it’s not the evasive fate of the Yowie.