Shares in specialist retailer of fresh cream cakes Cake Box (CBOX:AIM) sweetened 4.5% on Monday to a new all-time high of 397p after the group reported record first half results to 30 September.
Revenues grew 92% to £16.5 million resulting in pre-tax profit more than doubling to £3.7 million. For the four months through September, a period which compares a fully opened estate year-on-year, revenues were 50.5% higher to £11.5 million and pre-tax profit jumped 56.7% to £.6 million.
Underlying franchisee revenues were up 73.2% to £29.5 million in the half and up 31.6% to £19.4 million in the four months to September. Online sales were particularly strong, up 68% in the first half, representing around 23% of total sales.
STRONG DEMAND
Growth was driven by continued demand for the group’s unique proposition with 20 new franchised stores opened in the first half, taking the total to 174 sites.
The company finished the period with a record 62 franchisee deposits, which augers well for future growth. Management believe there is scope for around 400 sites across the UK.
As well as new stores, existing stores contributed to growth with like-for-like sales growth of 13.3% over the four months to 30 September, an acceleration compared with the 12.1% recorded last year.
CURRENT TRADING
In the first five weeks of the second half, trading remained strong with franchisee like-for-like sales growth of 14.4% and online sales up 46.6%.
Cake Box is targeting 32 new store openings in the second half and intends to accelerate the roll-out of its kiosk format inside Asda stores.
Importantly, the company said its supply chain remained ‘robust’ with several months’ worth of ingredients in stock, while it is ‘confident’ in meeting full-year market expectations.
Currently, consensus expectations are for revenues to grow 33% to £29.1 million and net profit to increase by 44% to £4.8 million.
After today’s positive update Shore Capital increased its full-year pre-tax profit estimate by 8% to £7 million, saying: ‘Cake Box remains immature, with many years of growth from a capital light franchise model that is expected to deliver double-digit EPS growth over the medium to long term.’
