A staff member pulls out a cake from a display fridge at a Cake Box franchise  2100x1400

Source: Cake Box

Egg-free cake specialist Cake Box has continued its positive trading momentum from the last financial year into the first part of this year, driven by further expansion of its franchise estate and digital marketing capabilities.

As part of a trading update posted ahead of its AGM this morning, the company reported a 6.8% increase in franchisee store like-for-like sales for the 17 weeks up to 30 July compared to the same period last year.

This, it said, was an improvement on the 5.4% like-for-like group revenue growth for the first 11 weeks of the new financial year, which was reported back in June along with its latest full-year results.

Cake Box’s balance sheet remained strong with cash of £7.4m prior to a proposed final dividend for FY23 of 5.5p per share, which amounts to a cash outflow of £2.2m on 29 August. It recently rejected a 160p-per-share takeover bid from Australian asset management group River Capital.

The business noted it had continued to increase its geographic presence with the opening of seven new franchise stores since the beginning of the new financial year. As of 30 July 2023, it trades out of a total of 212 franchise outlets nationwide.

Cake Box said it had increased investment in its marketing team, allowing it to focus on growing brand awareness and expanding its digital and e-commerce capabilities. Its new website went live in June, with the new platform providing sales benefits to its franchisees and garnering positive feedback and encouraging early results.

Meanwhile, the company said it was helping franchisees strengthen their margins by maintaining tight cost control and taking proactive measures to minimise the inflationary impacts on input and administration costs. This included passing on cost reductions resulting from a decrease in fresh cream prices during the first quarter of the year.

The board gave thanks to its outgoing non-executive chairman Nilesh Sachdev, who was stepping down after more than five years to ‘concentrate on his growing commitments outside of Cake Box’. A recruitment process to appoint his successor is to be initiated.

“Cake Box is fantastic business that has grown significantly since our IPO over five years ago,” commented Sachdev. “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,” he added.

In its outlook, Cake Box said it was on track to deliver year-on-year revenue growth in line with market expectations, and shareholder value in the short- to mid-term.