TIDMCBOX
RNS Number : 4405J
Cake Box Holdings PLC
14 April 2020
14 April 2020
Cake Box Holdings plc
("Cake Box" or the "Company" or the "Group")
Full Year Trading Update
A resilient business with an attractive offer to consumers and
franchisees
Cake Box Holdings plc, the specialist retailer of fresh cream
cakes, today announces a trading update for the full year ended 31
March 2020.
Full year trading performance
In the period to 8 March 2020, trading continued to be strong
across the Group, with like-for-like sales growth of c.5.1% in
franchise stores.
However, the Group saw a reduction in sales across its franchise
stores as the COVID-19 crisis developed during the remainder of
March 2020. Following updated UK Government advice on 23 March
2020, we decided to close all of our franchise stores as we looked
to protect our staff, franchisees and customers and also to help
relieve any further pressure on our NHS . As a result of this
impact towards the end of our reporting period, total like-for-like
franchise store sales growth for the full year to 31 March 2020 was
c.2.0% (FY19: 6.5%).
The Group expects to report revenue for the year of c.GBP18.7m,
up c.10% compared to the same period last year despite the
disruption experienced in March 2020 from COVID-19. The Board
expects adjusted profit before tax to be in the range of GBP4.1 -
4.3m (FY19: GBP4.0m). This figure excludes a GBP1.4m uplift from
the freehold revaluation of the Group's Enfield warehouse and head
office which is expected to be included in the Group's statutory
numbers.
The Cake Box proposition remains attractive to new and existing
customers across the country, offering personalisation, convenience
and serving dietary requirements at an appealing price point. The
Group is confident that consumers remain loyal to Cake Box and will
continue to be so following the lifting of restrictions.
COVID-19 update and support for franchisees
Further to our announcement of 24 March 2020, the Group is
exploring all possible routes to support franchisees amidst the
current crisis. In particular, we are assisting them in applying
for the Government's Retail, Hospitality and Leisure Grant which
will provide a significant level of support. We are also providing
franchisees with advice and assistance relating to the furloughing
of staff, whilst providing flexibility in certain payment terms
where appropriate. In addition, we welcome the UK Government
announcement that our franchisees will not have to pay business
rates for 12 months.
As a result of the above, noting that our franchise stores have
relatively low levels of rent and overheads, we are very confident
that our franchisees will be able to navigate this unprecedented
period. The Group has very healthy stock levels and therefore is
well placed to support the reopening of its franchise stores as
soon as UK Government advice allows.
At Group level, we are applying to the Government's Job
Retention Scheme in relation to Head Office, Warehouse and Bakery
staff that have been furloughed due to being unable to work in the
business during the current crisis. We are also taking all other
appropriate cost saving measures.
New store openings and pipeline
The Group opened 20 new high street stores in the year,
including Cardiff, Harlow and Portsmouth, whilst also expanding the
successful initial small trial of shopping centre kiosks to 12
locations, operated by local franchisees. The Company ended the
period with 133 franchise stores.
The Group has a strong pipeline of new franchise store openings,
although there may be an impact on the timing of openings as a
result of COVID-19, as there has been during March 2020.
Balance sheet and dividend
As reported on 24 March 2020, Cake Box has a strong balance
sheet with a current cash balance of c.GBP4m. The Group's only debt
is a mortgage of GBP1.6m secured by its freehold properties in
Enfield and Coventry.
The Group operates a franchise model and therefore has a
relatively low and flexible cost base. Following the cost saving
measures described above, the Group expects to have a monthly cash
burn of c.GBP200k while its franchise stores remain shut. The Board
is therefore very comfortable with the Group's current cash level
and liquidity despite the closure of its franchise stores.
Despite the strength of our balance sheet, the Board feels that
it is not appropriate to recommend a final dividend for FY20 with
the Group's full year results. At a time when there is so much
uncertainty, it seems inappropriate to use the cash for anything
other than protecting the financial strength and resilience of the
business. The Board recognises the importance of income to many of
the Group's shareholders and will continue to assess when it is
appropriate to recommence dividend payments.
Full year results date
The Group will confirm the date for its full year results for
the 12 months ended 31 March 2020 in due course.
Sukh Chamdal, Chief Executive Officer, commented:
"Our first priority remains the health, safety and wellbeing of
our colleagues, franchisees, customers and the communities in which
we operate across the country. Whilst this is an uncertain and
difficult time for the country, we are incredibly proud of the
efforts of our franchisees who have been sending thousands of our
cakes to front line workers to give them a slice of comfort during
these challenging times.
"Whilst the current closure of our franchise stores has and will
continue to have an impact on performance, we are confident that
our unique customer offer will continue to resonate over the long
term. Life is somewhat on hold for now, but when we emerge from
this we will still have birthdays, marriages and numerous other
occasions small and large to celebrate up and down the country.
"We're equally confident that our proposition to potential
franchisees remains attractive. We have a strong pipeline in place
to help continue to grow the Cake Box family and are developing
new, innovative ways to work with our existing partners, including
the expanded trial of our shopping centre kiosks. With our strong
balance sheet, the actions we are taking to reduce costs and our
resilient business model, we remain confident in the Group's future
prospects."
For further information, please contact:
Cake Box Holdings plc
Sukh Chamdal, CEO +44 (0) 20 8443
Pardip Dass, CFO 1113
Shore Capital
Stephane Auton
Patrick Castle +44 (0) 20 7408
Sarah Mather 4090
MHP Communications +44 (0) 20 3128
Oliver Hughes 8570
Simon Hockridge cakebox@mhpc.com
Charlie Barker
Pete Lambie
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END
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