Market Prognosis

A concise summary of the major macro events of the past 24 hours, and selected UK company-specific news.

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November 14, 2023

Cake Box celebrates success

Macro & Overnight

UK employment and payroll data was stronger than expected, with an unchanged unemployment rate and average earnings and payrolls ahead. This further highlights that the economy continues to hold its head above water in defiance of most forecasts.

Ruffer said in its monthly update that its firm view is that bond yields cannot rise further from here without significantly damaging the real and financial economies. Hopefully, confirmation of lower inflation in the US and the UK over the next two days can further relieve the yield environment.

Orsted, the Danish wind power developer, has sacked its CFO and COO as it grapples with the implosion in the offshore wind market.

UK Company News

Cake Box reported H1 results with EPS ahead by 20%, net cash by 42% on revenue ahead by 7%. It saw margin improvements due to easing input costs. H1 dividend was increased by 10.5%. Trading has continued positively post-period end, and it is on track to deliver in line with expectations. 

Having suffered growing pains in pursuit of its attractive market niche for celebration cream cakes, Cake Box replaced virtually the entire senior management team last year. It has established a platform to grow more efficiently now. The well-attended CMD last month highlighted the potential to double the UK store count to 400. Cake Box now ranks first in Google Natural search results for birthday cakes, ahead of M&S, ASDA and Waitrose, vindicating the investment made in its new website and marketing strategy. Something worth celebrating.       

DP Poland updated that its LFL System order count in Poland grew 15.4% in Q3 and 37.2% in October. Food and labour costs remain in line with expectations. Deliveries in October were 49% ahead yoy. 

The new CEO is starting to deliver the pizza. He plans to improve the operational performance of this previously underachieving business by simply delivering his pizzas more quickly. A 20-minute-old pizza is twice the product of a 30-minute-old pizza and many times more likely to result in higher customer ratings and repeat orders. It sounds simple, but affecting such change across 200-odd outlets is challenging. The prize, however, is to get unit-level profitability to levels that allow for subfranchising at scale, which would be financially transformative for this long-forgotten growth opportunity.     

Zegona restored its listing today following the financing of its acquisition of Vodafone Spain, having completed the equity tranche of its ambitious funding plans. While there is much criticism of the effectiveness of the UK’s capital markets, it has provided more than $300m of equity capital for this ambitious Spanish telecoms roll-up strategy.  


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