Cake Box

Cake Box is “building momentum” as new store openings helped drive further revenue growth in the first half of the year.

The UK’s largest franchise retailer of fresh celebration cakes grew revenue 4.3% to £18.7m in the six months to 30 September, as new stores led to shoppers buying more cakes. It now has 232 outlets, up from 214 a year before.

“Our store opening programme is gaining traction, with 14 new franchise stores opening in the year to date, compared to 10 by the same date last year,” said CEO Sukh Chamdal. “This success gives us confidence in exceeding the store opening target set for the year.”

Seven further shops have opened in H2 to date, with management now raising guidance for the full year to “in excess of 25” new stores. New locations include Crewe, Greenwich and Lichfield, where Cake Box said it identified “compelling growth opportunities” and anticipates strong customer demand.

“Momentum is building for Cake Box,” said Darren Shirley, equity research analyst at Shore Capital. “A raised target for new stores bodes well for the future, and the group looks increasingly well placed for both short and medium to long-term progress.”

Following several years of investment in its production process, the company has also grown pre-tax profits by 16% to £2.8m. This included investment in its marketing team, which has now finished bringing its graphic design and PPC (pay per click) in-house.

Its marketing spend helped drive online sales which are performing strongly, up 17% on last year with 120,000 new customers. Online now accounts for 23% of franchise store sales, up from 21% in the same period last year.

“Online sales appear to be rising faster than store-based in October, signalling the momentum being harnessed through the marketing strategy,” said Wayne Brown, research analyst at Panmure Liberium.

Cake Box launched its new Cake Club loyalty programme in the period, which gives customers offers or discounts as the customers progress through the programme. So far, 63,000 customers have signed up.