(Alliance News) - Cake Box Holdings PLC on Wednesday warned that annual profit will be "significantly" below market forecasts as it struggles to pass on higher costs.
Shares in Cake Box were down 40% at 105.99 pence each on Wednesday morning in London.
The egg-free cream cake seller said inflationary pressures have increased, and it has only managed to pass part of this onto franchisees, meaning its full-year gross margin will be hit.
This has been compounded by weaker-than-expected sales at the franchise level during July and August.
London-based Cake Box said it believes the summer performance has been "exacerbated by the recent heatwave which has impacted store footfall".
"Accordingly, due to the worsening outlook and increasing cost of living pressures on the consumer, the group now expects full year profitability to be significantly below current market forecasts," Cake Box said, adding that it does not expect inflationary pressures to eased up before the end of the financial year.
In Cake Box's financial 2022 results published back at the end of June, the company had said it was mindful of an increasingly challenging economic and trading environment, but Chief Executive Sukh Chamdal had remained upbeat: "As I said at the height of the Covid pandemic, there will still be birthdays, marriages and countless moments in our lives to celebrate with a slice of our delicious cake."
In the financial year that ended March 31, Cake Box recorded pretax profit of GBP7.7 million on revenue of GBP33 million.
By Xindi Wei; xindiwei@alliancenews.com
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Cake Box Holdi. (CBOX)