Investors grab slice of profits as Cake Box sales jump

East London cake company Cake Box reported a jump in sales and earnings in its maiden results on Monday, as customers flocked to a growing number of stores to get their hands on sponge-, cream- and cheesecakes.

The cake seller, which specialises in sponge cakes decorated with fresh cream and also has an egg-free range, reported sales up 44 per cent to £8.3m in the six months to September 30 — its first set of results since its initial public offering in June.

Pre-tax profits, adjusted to strip out the £599,000 cost of listing on London’s junior Aim market, rose 34 per cent to £2m “ahead of our previous expectations.” Cake Box added 15 new franchise stores in the period, bringing its total number to 101, and said a similar number of openings were planned for the second half of the year.

Despite a number of IPO misfires this year and a recurring lament from high street retailers about the negative impact of the hot summer weather on consumer footfall, Cake Box said it had performed well since listing and seen franchisee like-for-like sales growth of 4.4 per cent. Online sales also jumped 86 per cent to £2m.

“These results reflect the robust growth opportunity presented by our franchisee store rollout strategy,” said chairman Neil Sachdev. Chief executive Sukh Chamdal said the first eight weeks of the second half of the year had been encouraging, and forecast “another year” of full-year growth.

Of particular note were Cake Box’s new individually decorated caramel and chocolate cheesecakes, the company said, which created a “real buzz” with customers.

As well as additional franchise store openings, Cake Box said it planned to complete a new warehouse and distribution centre in the north of England in 2019, which will deliver “sponge production capability”, reduce distribution costs and support its production site in Enfield, London.

Darren Shirley, analyst at Shore Capital, said Monday’s numbers were “very strong” and he anticipated investor returns to “build further.”

“Operating in the large, and fragmented UK cake market, we believe Cake Box continues to benefit from its egg-free commitment which makes its products suitable for a lacto vegetarian diet which is common in Asian communities (for religious reasons) where egg is classed as meat,” said Mr Shirley.

Cake Box declared an interim dividend of 1.2p per share.

Let's block ads! (Why?)