Cake Box upbeat after strong first half

(Sharecast News) - Cake Box reported a strong first-half performance on Tuesday, with revenue increasing 4.3% to £18.7m, supported by positive momentum in franchise store sales and expanding online demand. The AIM-traded firm said gross profit rose 11.5% to £10.1m, driven by efficiencies in production processes and a recent accounting change for national marketing levy income.

EBITDA climbed 11.9% to £3.5m, and pre-tax profit reached £2.8m, marking a 16.3% increase year-on-year.

Reflecting confidence in its outlook, the company raised its interim dividend by 17.2% to 3.4p per share.

Cake Box said it added seven new franchise stores in the period, bringing the total number of stores to 232 by the end of September, including new locations in Crewe, Greenwich, and Lichfield.

Franchise store sales rose 8.1% to £39m, with online sales contributing 22.9% of that revenue, up from 21.3% last year.

The company said its marketing initiatives, including the 'Cake Club' loyalty programme, boosted online engagement, with website visits up 40% year-on-year and the subscription database growing 40%.

Online sales saw a 16.6% increase, attracting 120,000 new online customers during the half.

Innovation in product offerings also supported growth, with new collaborations, such as with Nutella, yielding five exclusive products.

Cake Box launched the 'Lemony Layers' collection and expanded its product line with 50 new designs, including a new kids' cake collection.

Investment in the Cake Box Hub and strong supplier relationships helped the company manage cost pressures effectively.

Following the period, trading remained robust, with franchise sales up 9.9% in October and like-for-like sales up 4% year-on-year.

Seven additional franchise stores were opened after the period ended, bringing the total to 14 new stores this financial year.

Cake Box said it expected to exceed its target of 25 new store openings by the year-end.

October online sales grew 23%, accounting for 23.9% of franchise store sales, underscoring sustained digital growth.

The group said it remained on track to meet full-year market expectations.

"During the first half of the year, we delivered strong growth across key financial metrics and expanded our customer base, resulting in double digit increases in profits and dividends," said chief executive officer Sukh Chamdal.

"We have seen continued growth in online sales as well as brand awareness. Importantly, we increased our customer database by 40% and launched our customer loyalty programme in the period.

"Our store opening programme is gaining traction, with 14 new franchise stores opening in the year to date, compared to ten by the same date last year."

Chamdal said that was achieved in collaboration with the company's external property consultants, with the success giving it confidence in exceeding the store opening target set for the year.

"We enter the second half with ongoing positive trading momentum and are on track to deliver full year performance in line with market expectations.

"The board remains confident in the company's long-term prospects, and we are making strategic progress in building a larger and more profitable business for our shareholders, franchise partners and colleagues."

At 0926 GMT, shares in Cake Box Holdings were down 0.96% at 186.2p.

Reporting by Josh White for Sharecast.com.