Charles M. Shulz, the creative genius behind long-running comic strip, Peanuts once mused: “All you need is love. But a little chocolate cake now and then doesn’t hurt.” Nearly 60 years later people are still taking that gem of wisdom, if Cake Box LON:CBOX’s latest set of results are considered.
The Enfield-based, AIM-listed purveyor of cream cakes published its half-year results to end-September. It reports positive trading momentum amongst its franchisees, increased online sales and expects to exceed new store opening targets for the year.
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Cakes flying off the online shelves
Cake Box has been growing its online presence, and whilst still a significant bricks-and-mortar fixture on the UK high street – an estate that the cake maker is energetically expanding with seven new locations opening in the last half-year – its sees online as a significant revenue centre in the coming years. The Cake Box website saw a 40% uptick in traffic in the past six-months and management said: “[…] The company’s conversion rate remains industry leading and a 14% increase in conversions has resulted in the increase in online sales year-on-year.”
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Cake Box’s group revenue was up 4.3% year-on-year to GBP18.7m on the back of increased volume from the twenty stores the group opened in 2023. It reported positive trading momentum in franchise store sales, with like-for-like sales growth of 2.0% for the half-year.
The company’s gross margins were up 3.5 percentage points y-o-y to 53.8% whilst making production across the group more efficient. Cash in hand was GBP5.6m, down GBP300,000 after the company bought land for the expansion of its Bradford depot.
Cake Box dividend increase
Cake Box increased its dividend by 17.3% to 3.4p/share. Management sees this as a statement of its confidence in future growth prospects.
Sukh Chamdal, Cake Box’s chief executive officer, said in a statement to the market: “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.”
The UK high street has been bruised and battered. It has had to deal with lockdowns during the Coronavirus pandemic, and a drop-off of trade resulting from the cost-of-living crisis, and is increasingly looking a monoculture of betting offices, vaping stores, and phone stores. Cake Box, however, is bringing a bit of colour and joy back into the town centre. Despite running an expanding franchise network, it still retains the ethos of a family-run business.
When we last wrote about Cake Box, we believed that it was still undervalued. The company opened trading on 12th November at 188.86p, up 35% over one-year and up 13.8% year-to-date. It has a market cap of GBP75.2m. Cake Box still looks a sweet deal at this price.
