8th Apr 2024 17:19
(Alliance News) - Cake Box Holdings PLC on Monday reported that annual profit will top market expectations, and the eggless cakes maker continued to grow its store footprint.
Cake Box expects to report a 9.0% increase in revenue for the year ended March 31, from the GBP34.8 million it achieved in the previous year.
Co-Founder and Chief Executive Officer Sukh Chamdal said: "We are delighted to have delivered a year of solid growth in all our key performance areas and full year profits slightly above expectations despite the backdrop of uncertain macroeconomic conditions. We expect to report an increase in all key financial metrics."
Broker Liberum said Cake Box's annual revenue prediction implies growth of 11% year-on-year in the second half of the financial year, picking up speed from a 6.8% climb in the first half.
Over the last year, Cake Box opened 20 new franchise stores, bringing its total number of stores to 225.
Liberum analysts added: "The demand for new stores remains strong among the group's existing franchisee base as well as new enquiries from prospective franchisees. The group has engaged external property consultants to develop a strategy for Cake Box to reach its 400-store long term target. This has progressed well, and the group has already identified [around] 200 target areas for new stores where it will now work on finding the appropriate locations and the right franchisee partners."
Like-for-like sales in franchise stores are expected to increase year-on-year by 4.4%, Cake Box added.
The company's online 'click and collect' distribution channel is proving "increasingly popular", the celebration cake maker said. Shore Capital Markets noted online sales now make up around 2.0% of overall group sales, and making up as much as 40% of sales for some of the more recently-opened franchise stores.
Shore added: "A new co-funded national advertising fund [around GBP2 million in scale] has recently been established, which will underpin a step-up in digital marketing which is already reported to have improved the group's overall marketing effectiveness. Management talks positively about 'higher retention' and the ability to attract new customers to the Cake Box brand, we see a process that is in the early stages and will be a significant benefit to the business over the medium to long term."
Cake Box's net cash position at March 31 totalled GBP7.3 million, a 16% increase from the GBP6.3 million a year prior.
Shore Capital added: "Cake Box is now very well placed to deliver on its evolved growth strategy, enhanced marketing capability combined with the considerable knowledge and experience of Founder and CEO Sukh Chamdal. Cake Box remains immature, and after two years of stability and consolidation looks well positioned to deliver substantial capital light, cash generative medium to long-term growth."
Cake Box shares closed 2.5% higher at 165.00 pence each in London on Monday afternoon.
Cake Box reports annual results in June.
By Emily Parsons, Alliance News reporter
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