Cake Box Holdings Limited saw its value nearly halve today after warning that full year profits would be significantly below current market forecasts.
Shares fell 45% after the fresh cream cake retailer said inflationary cost pressures and weaker than anticipated sales at the franchise level during July and August has resulted in franchisee like for like sales declining 2.8% in the first half to date.
The group said the summer performance had been exacerbated by the recent heatwave which has impacted store footfall.
Broker Liberum slashed its full year 2023 earnings per share forecast by around 33% noting the inflationary pressures will take time to mitigate.
Liberum also cut its price target to 250p from 470p but recommended buying the stock on weakness.
On the plus side the broker said the balance sheet remains in rude health and there was no change to group’s “underlying cash-generative growth story underpinned by franchisee demand for new stores and new channels like online and kiosks in supermarkets.”
These boots were made for walking
Shares in Shoe Zone PLC (AIM:SHOE) advanced 7% in mid-morning trading as the shoe retailer pleased the market with a positive update on trading.
In a short but sweet statement the group said that since its last update on July 26, 2022, trading has continued to exceed expectations due to continued strong demand for summer and back-to-school products throughout August.
The company also continues to benefit from the margin improvements as outlined in recent trading updates, it added.
Shoe Zone said it now expects adjusted profit before tax for the financial year ending October 2, 2022, to be not less than £10.5mln.
Chinese concerns weigh on ECO Animal Health
Shares in Eco Animal Health Group PLC (AIM:EAH) slipped by 10.7% in early deals as the group reported a sharp fall in sales and cautioned that the Chinese market would remain subdued for a while.
The company announced a 22% fall in sales to £82.2mln and a decrease in EBITDA to £6.4mln from £21.3mln in 2021. Sales in China and Japan declined significantly to £28.4mln (2021: £58.9mln) although sales in the rest of the world improved to £53.8mln from £46.7mln.
David Hallas, Eco's chief executive officer also warned he expects “that China will remain subdued for another quarter or two but the recent improvement in pork to feed price ratio provides the foundation for a stronger end to the financial year.”
Analysts at Peel Hunt lowered their price target for Eco shares to 270p from 350p and cut their full-year 2023 pre-tax profit forecast by 40% to £5.6mln from £9.4mln.
But they remained positive on the group, reiterating a 'Buy' rating, noting: “The recent increase in pricing and lower sow herd should ensure a materially better market, but this will take time to flow through to demand.”