Q1 2016 - Investor Update

Fun News

  1. We reached our goal of raising $1 million of angel equity capital and are in discussions with several strategic capital partners to fill out the final $500,000 piece of our equity raise.
  2. We’ve had great success so far this year with our new product launches (Cocoa & Coconut muesli and Squares), which are already available in over 1,500 locations nationwide. 
  3. We attended Natural Products Expo West in Anaheim, CA and were blown away by the energy and excitement that continues to build in the better-for-you food & beverage industry.
  4. Hannah was recently selected as a Women in Business honoree by the Twin Cities Business Journal.
  5. We have had several PR placements – including local TV segments (such as this one from last week) and national Clean Eating Magazine’s Clean Choice award.
  6. We launched a new website! Check it out, along with our new subscription program. Enter code FAMILY to get a 25% discount on everything on our online shop.

New Places to Find Seven Sundays:

  1. Sprouts (starting in June)
  2. Raley’s
  3. Lucky’s Market
  4. Kroger (select stores nationwide)
  5. Safeway (Northern California and Rocky Mountain)
  6. Whole Foods (new regions: SoPac and NorCal)
  7. Natural Grocers (bulk section, starting in May)
  8. Squares availability: The Fresh Market, Rocky Mountain Whole Foods and Safeway stores, Kowalski’s, over 50 CIBO airport locations and dozens of natural and independent stores.

Our Challenges

  1. Target Store Reduction – In April, we transitioned to approximately 350 health & wellness Target stores across the country (versus chain-wide distribution). This will significantly improve our productivity by store and is better for our brand and relationship, but it has been difficult fielding consumer complaints when they no longer find us at their local Target.
  2. Warehouse Transition – At the end of last year, we began outsourcing our warehouse and fulfillment. While nice to shed the distraction of managing our own warehouse, we have had some issues with constancy and accuracy, and the services have been more expensive than we estimated. We are working with our partner to improve communication.
  3. Retail Price Issues – As a small brand, we are learning how difficult it is to impact price once our products are on the shelf (example – at Kroger our retail price ranges from $4.99 to $9.29 depending on the division). We are working on confirming retail price prior to store resets, but have some clean up work to do in the meantime.
  4. Sam Chastain – An employee we hired last year to help with sales, has moved on and now works for Sabra Hummus. January 22nd was his last day. We will miss Sam around the office, but luckily he hasn’t moved far and still swings by for his fix of Cocoa & Coconut muesli regularly. We have no plans replace Sam at this time.
  5. Glyphosate in Oats - We are digging into the growing consumer concern of glyphosate (Roundup) usage in oat harvesting through a process called desiccation. While our oat supplier has stated publicly that it will reject oats treated with Roundup, we are working on improving sourcing, transparency and traceability. Meanwhile, a recent Quaker lawsuit is elevating the issue to headline news. 

Help Wanted

  1. Foodservice Contacts – Our new Muesli Squares have opened up entire new channels of distribution. If you have buyer contacts or ideas of where these may fit (your company café, gym, coffee shop, etc.), please send ideas to Hannah.
  2. Amazon Broker – We are interviewing brokers and/or consultants that specialize in growing online and Amazon business. Please pass along any referrals!
  3. Freelance Designer – Do you know someone who is an expert in InDesign, Photoshop and/or Illustrator and has some free time on their hands? Please connect us! We are looking for help with graphic design projects such as creating sell sheets, banners, coupons, etc.
  4. Social Media – Connect with us on Facebook and Instagram, if you are not already. This is the best way to see our day-to-day lives and brand vision. Also, you can help grow our fan base by tagging and referring friends. If each of you did this, we’d hit easily hit our goal of topping 10k followers by the end of the year. 
  5. Store Checks – If you spot Seven Sundays in the store while shopping, we’d love to see pictures! Snap a photo and text it Hannah (612-562-5316).

Financial Recap

With all of our new distribution, we are experiencing heightened activity in all areas of our business. Sales in the first quarter of this year were almost five times the same period last year (excluding the impact of the nationwide Target launch last January). We finished the quarter below our budget which is almost entirely due to lower than expected sales with our largest distributor, UNFI. This appears to be due to timing issues and we expect to make up these sales later in the year.

Our margins were higher than expected due to better yields and lower ingredient prices (way to go, Brady!). We also spent less on general and administrative costs, so our net loss is approximately $35,000 less than our budget.

To access our full set of financials for Q1, click here.