Stores reopened and a positive outlook
Cake Box’s preliminary FY2020 results, released today, reconfirmed strong sales growth in FY2020 with scope for an expanded distribution footprint to deliver further sales revenue expansion in FY2021. While the Covid19 lockdown clearly disrupted franchisees’ in-store sales, Cake Box appears well placed to spring back both quickly and with a positive growth trajectory.Current trading news looks positive. Cake Box was in a position to start re-opening its franchised stores, commencing 18th May. By the end of the month 98% of its stores were open with the added benefit that 75% of these were trading at a level of at least 90% of pre-Covid19 levels. The overall closure period – i.e. time lost to the pandemic – was around 6 weeks. While comprehensive in scope, the company’s safety measures were implemented for an immaterial cost. Importantly, its stores were open in advance of the end of Ramadan celebrations.
Based on the company’s FY2020 figures the company trades on a trailing EV/sales ratio of 3x. We are surprised that this rating is only in line with what we deem to be its franchised food retailer peer group, given the brisk underlying sales growth at Cake Box, plus a robust balance sheet and the benefits of operating with a capital light business model.
Cake Box Holdings PLC. Cake Box Holdings PLC is a United Kingdom-based franchise retailer and manufacturer of cakes. The Company operates its retail stores under the name Egg free Cake Box. It manufactures and sells personalized fresh cream and egg free cakes. The Company offers a range of cakes that include cup cakes, photo cakes, number cakes, fruit cakes, mendhi cakes, round cakes, kid's cakes, platter cakes, and wedding cakes. It provides customized cakes for purchase on demand or ordered advance in store or online through https://www.eggfreecake.co.uk/. The Company operates over 110 franchise stores in the United Kingdom.
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