Cake Box on track for full year despite drop in H1 profits

Specialist cream cakes retailer Cake Box said on Monday that it was on track to meet expectations for the full year even as it posted a drop in first-half profit amid cost increases.

In the six months to 30 September, pre-tax profit fell 45.1% to £2m, while revenues edged up 2.1% to £16.8m. Meanwhile, earnings before interest, tax, depreciation and amortisation fell 32.4% to £2.8m.

Cake Box said the decline in profit reflects the previously-reported challenging trading environment in the first half, cost pressures and increased investment in the business.

On a like-for-like basis, franchise store sales dipped 1.1% during the period, against "very strong" comparatives.

Chief executive officer Sukh Chamdal said: "Although revenue increased, trading in the first half of the period was against a very strong comparative period last year, and was impacted by exceptionally hot weather which went on for a far longer period than normal.

"In addition, higher levels of international travel in July and August, were coupled with the rising cost of living and inflation. Once the summer holiday period finished, we began to see a recovery in our sales, alongside the continued growth of our franchise store estate.

"Encouragingly, the improvement in trading seen towards the end of the half year has continued into October. Whilst the board remains cautious in light of the uncertain economic climate and the unpredictability in consumer spending, the group's current trading is on track to achieve full year market expectations."

Since the summer, franchise sales are up 4.6% on a like-for-like basis, it said, while online sales were 6.8% higher on the year in October.