Shares in Youfoodz (ASX: YFZ) have fallen nearly 8 per cent this morning after the prepared foods company slashed its EBITDA forecast for FY21, but the silver lining is a huge surge in direct-to-consumer sales with home deliveries up 28 per cent in the March quarter.
When Business News Australia caught up with Youfoodz CEO and founder Lance Giles ahead of the group's initial public offering (IPO) in November, the B2C business represented 59 per cent of total sales.
But in 2021 thus far that figure is up significantly at 69 per cent, and the company has also revised gross revenue for FY21 upwards by a few million dollars to $201-205 million.
"Youfoodz continues to deliver significant top-line growth. This has been driven by impressive performance in B2C, where new B2C customer acquisition momentum continues strongly," says Giles.
"Looking forward, the investment in customer acquisitions is expected to support Youfoodz's FY2022 growth profile, as newly acquired customers support repeat ordering in the future."
Direct-to-consumer gross revenue jumped by 41.2 per cent to $34.6 million in the March quarter, with order frequency rising and the average customer spending 10.4 per cent more at $96.8 per order. This was partly driven by a summer marketing campaign that led to a material awareness in national brand awareness.
Despite this progress for the Brisbane-based company's highest contributing division, underperformance in its business-to-business (B2B) segment - tailoring to petrol & convenience (P&C) service stations, gyms and corporates - has led to a revised FY21 EBITDA of $1-2 million, compared to the prospectus expectation of $2.9 million.
The company blamed the decline on the ongoing impact of COVID-19 on the retail channel, as well as the strategic decision to invest in marketing and other customer acquisitions - initiatives that have been driving B2C growth.
"As pandemic restrictions have evolved, early indications in Q4 FY2021 are that some P&C customers are beginning to increase ranging again, however uncertainty exists as to when Gym/corporate customers will recommence ordering," Youfoodz explained in today's update.
"Furthermore, during the quarter a mid-sized B2B customer paused stocking Youfoodz products as it explored nonbranded ready made meal alternatives. Pleasingly, this customer has recommitted to stocking of Youfoodz product from Q1 FY2022.
"While a challenging period in this channel, Youfoodz continues to strengthen its wholesale relationships and explore range expansion opportunities with existing customers. This is particularly evident in supermarkets, including successful meal range extension with one large national supermarket customer and the agreement to launch our beverage range into another national customer."
The development of Youfoodz's state-of-the-art manufacturing facility continues as planned, now in the process of finalising the design and negotiating lease terms.
"Youfoodz is also well advanced in the evaluation of new equipment and suppliers that will be integral to achieving efficiencies and productivity gains once the new facility is commissioned, and has commenced procuring selected items," the company said.Never miss a news update, subscribe here. Follow us on LinkedIn, Instagram and Twitter.
Business News Australia
Help us deliver quality journalism to you.
As a free and independent news site providing daily updates
during a period of unprecedented challenges for businesses everywhere
we call on your support