Shares in Cake Box (CBOX:AIM) rallied 8.6% to 209p after the fresh cream cakes retailer served up a reassuring full year trading update that confirmed the strong trading seen since the end of lockdown has continued.
The Enfield-headquartered egg-free cakes franchisor expects adjusted pre-tax profit for the year to March 2022 to be in line with market expectations, having put recent reporting and accounting errors behind it under what Shore Capital described as ‘a new upskilled management team’.
Following the soothing update, the house broker left its 2022 pre-tax profit forecast unchanged at £7 million and retained its 2023 taxable profits forecast of £7.8 million.
SWEET SALES REBOUND
Cake Box expects to report total sales up roughly 50% for the year to March 2022 thanks to continued strong trading across its store estate and online delivery channels in the second half.
In part, the 50% sales leap reflects extended period of lockdowns and store closures in the 2021 comparative period.
However, sales for the 10 months to March 2022, stripping out the impact of the March 2020 lockdown and associated store closures from the comparative period, are still expected to have increased by a tasty 32%.
‘EXCEPTIONAL’ YEAR OF STORE OPENINGS
In the statement, Cake Box highlighted an ‘exceptional’ year for store openings, insisted its franchise pipeline remains strong with high demand and also said its successful trial of Cake Box kiosks with Asda has continued to expand.
Co-founder and CEO Sukh Chamdal (pictured below) said Cake Box has ‘delivered another record performance for the year, demonstrating the continuing appeal of our customer and franchisee proposition. Our strategy to reach customers across the UK is starting to deliver.’
THE SHORE CAPITAL VIEW
‘With the group’s decisive actions over the past three months, we believe that Cake Box now has the board and broader team to support and drive medium to long growth,’ said Shore Capital.
Whilst the UK consumer environment is expected to become increasingly tough, Shore Capital expects ‘the special occasion/affordable treat to be relatively resilient’ and continues to see the Cake Box format as ‘highly potent across the UK high street, shopping centres and superstores.
‘With the capital light franchise model set to drive cash generation as well as sales and profits we are positive on Cake Box’s potential.’
