Cake Box expands its egg-free footprint

Cake Box (CBOX), the egg-free cake retailer, seems to have shaken off concerns over a 2020 customer data breach. Investors have tucked into the stock: while the shares dropped off a cliff at the onset of the pandemic, they are now up by 125 per cent over the past 12 months. The announcement of an increased half-year dividend of 2.5p a share hasn’t hurt perceptions, either.

The data breach led to a £486,000 exceptional provision in the 2021 full-year results. Management believes this will cover all required costs. At the half-year reporting date, the provision sits at £243,000.

Revenue and pre-tax profits are now above pre-pandemic levels. This is notable, given stores were closed for six weeks of the interim period. An increased physical presence has driven growth – 20 new franchise stores were opened in the interim period, taking the group to 174 outlets at results day. A robust pipeline has a full-year target of 32 new stores.  

Online performance has played its part. Franchisee online sales were up 68 per cent to £6.7m. The group uses its own delivery system, as well as utilising third-party platforms such as Deliveroo (ROO) and Just Eat (JET). Sales will continue to benefit from a restrictions environment where customers can enjoy Cake Box’s products at larger social events.  

Judging by FactSet consensus estimates, analysts expect the good times to continue. Forecasts suggest EPS of 16.2p for the 2023 fiscal year, up from 9.6p in 2021. With a net cash position and “no disruption to supply to date” it is a good time to enjoy a slice of Cake Box. Buy.

Last IC view: None

CAKE BOX (CBOX)
ORD PRICE:	395p	MARKET VALUE:	£158m
TOUCH:	390-400p	12-MONTH HIGH:	395p	LOW: 170p
DIVIDEND YIELD:	0.6%	PE RATIO:	26
NET ASSET VALUE:	32p	NET CASH:	£4m

Half-year to 30 Sept	Turnover (£m)	Pre-tax (£m)	Earnings per share (p)	Dividend per share (p)
2020	8.59	1.67	3.45	1.85
2021	16.4	3.70	7.46	2.50
% change	+92	+122	+116	+35
Ex-div:	18 Nov
Payment:	10 Dec