Cake Box Holdings plc (LON:CBOX), the specialist retailer of fresh cream cakes, has announced a trading update ahead of the Company’s annual general meeting, being held at 11.00 am today.
Trading update
The Group is pleased to provide an update for the 17 week trading period to 30 July 2023. The positive trading momentum from the second half of the previous year has continued, with franchisee store like-for-like sales increasing 6.8% for the first 17 weeks of the new financial year (ending 31 March 2024 (FY24)). This is an increase from 5.4% like-for-like sales growth for the first 11 weeks of the new financial year reported at the Group’s FY23 results on 26 June 2023.
The Group has continued to maintain tight cost control and taken proactive action to minimise the inflationary impacts on its input and administrative costs. There have been some improvements in input costs to the Group, with fresh cream prices decreasing in the first quarter of the year. Cake Box remains mindful of significant inflationary pressures that still exist on its franchisees and customers across the country and therefore has passed on part of this cost reduction to franchisees to help strengthen their margins.
The Group continues to have a strong balance sheet and had cash as at close of business on 30 July 2023 of £7.9m, prior to paying the proposed final dividend for FY23 of 5.5 pence per share, amounting to an upcoming cash outflow of £2.2m on 29 August 2023.
Strategy in action
As announced at the time of our FY23 results, the Group has increased its investment in marketing in-line with its stated plan. The strengthened marketing team has focused on growing Cake Box’s brand awareness and expand its digital and e-commerce capabilities. The Company’s new website went live during June 2023, and it is concentrating on leveraging this and the sales benefits that this new platform provides to its franchisees. The feedback has been positive and there have been encouraging early results.
Cake Box continues to increase its geographic presence, opening a further seven new franchise stores since the beginning of the new financial year. The Group now trades out of 212 franchise stores as of 30 July 2023.
Board update
After more than five years as the Non-Executive Chairman of Cake Box, Nilesh (“Neil”) Sachdev has informed the Board of his intention to step down at the Company’s Half Year Results in November 2023 to concentrate on his growing commitments outside of Cake Box. The Board would like to thank him for the pivotal role he has played in helping guide the Company since its IPO on AIM in June 2018. The Board will initiate a recruitment process to appoint Neil’s successor.
Neil Sachdev commented: “Cake Box is fantastic business that has grown significantly since our IPO over five years ago. I am proud of what we have achieved, building a company that now has over 100 franchisees including a large number of female franchisees running their own businesses. We have a strong leadership team who I am confident will continue our growth in the years to come.”
Outlook
As a result of the above progress on trading and strategy, the Group is on track to deliver year-on-year revenue growth, in line with market expectations.
Looking further ahead, with a strong balance sheet, underpinned by a highly cash generative business model, the recent investment in professionalising the Group’s functions and its baking and distribution facilities along with the strengthened sales and marketing functions, the Group is well positioned to deliver shareholder value in the short- to mid-term.
Notice of Capital Markets Event
The Company plans to host a Capital Markets Event for investors and analysts to provide an update on the Group’s strategy on Wednesday 18 October 2023 at its head offices in Enfield. For further details, please contact MHP at [email protected]
