Cake Box Holdings

Aug 31, 2022

New!Follow this author to stay notified about their latest stories. Got it! Got it! getty Sweets manufacturer Cake Box Holdings has slumped in value on Wednesday after slashing its profit forecasts. In fact an 40% fall as I type to 107p per share makes it one of the London Stock Exchange’s biggest casualties. It was trading at its cheapest since March 2020 below £1 earlier in the session. Cake Box — which operated a franchise network of around 185 standalone shops and 35 supermarket and shopping mall kiosks as of March — has slumped after saying it expects full-year profits to be “significantly below current market forecasts.” Rising Costs Forecasts have been downgraded due to a “significantly more challenging” trading backdrop since the business updated the market on June 27, the company announced. Cake Box said that “inflationary cost pressures across the group have increased above levels previously anticipated.” It added that it “does not see these easing before the end of the financial year” in March 2023, too. Some of the impact of rising costs has been passed onto its franchisees, the company said. But it still expects the full-year gross margin to be harmed. Double Whammy Join the Conversation In other news Cake Box also said it has experienced worsening sales in recent weeks. It commented that “weaker than anticipated sales at the franchise level during July and August” mean that like-for-like franchise sales are down 2.8% so far in the first fiscal half. The business said that the recent heatwave in the UK has likely exacerbated reduced footfall at its outlet more recently. This marks a stark comparison with Cake Box’s comments in late June. Then it said that “sales have remained robust” since the new financial year began in April. And this was against “a very strong comparative trading period,” it had commented. Site Network Continues Growing The company said it is taking “proactive action” to limit the impact of increasing input and administrative costs. These include introducing supply cost increases. Cake Box added that it plans to continue expanding its geographic footprint, noting that it has “a strong pipeline of potential new franchisees and deposits for sites.” The firm also highlighted the increased investment it is making in “professionalising” its functions. Cake Box also described its balance sheet as “strong,” with cash of £6.7m as of 30 August. It plans to pay dividends worth £2m next month. Follow me on  Twitter .