How have these two consumer stocks performed lately during covid-19 pandemic: Naked Wines & Cake Box Holdings?

Summary

• Naked Wines Plc reported 185% year-on-year sales growth from new customers segment for four months ended on 31 July 2020.
• John Walden has stepped down as chairman of the Group.
• Cake Box Holdings Plc reported sales of £8.6 million during H1FY20 ended on 30 September 2020.
• Six more stores have been added in H1 FY20, taking the total count to 139.

Naked Wines Plc (LON:WINE) and Cake Box Holdings Plc (LON:CBOX) are LSE listed consumer stocks. Shares of WINE were down by around 1.34%, and shares of CBOX were up by close to 3.06%, respectively from the last closing price (as on 30 October 2020, before the market close at 10:20 AM GMT).

Is Naked Wines Plc ideally positioned to be a long term winner?

Naked Wines Plc is the FTSE AIM 100 listed international wine retailer involved in retailing of wines, beers and spirits. The Company is a leading player in the direct-to-consumer wine market in the US, UK and Australia.

Trading Update (four months ended on 31 July 2020) as reported on 6 August 2020

• The Company has reported the sales growth of 76% year on year for the first four months of FY21 ended on 31 July 2021, driven by new customer sales growth of 185% and repeat customer sales growth of 58% year on year for the same period.
• The Company has estimated total sales growth for FY21 to be around 40%. It has assumed an increase in new customers and a reduction in repeat purchase. Sales contribution from repeat customers is projected at £65-70 million. Investment in new customers for FY21 is estimated at around £35-40 million.
• Following the announcement on 24 July 2020, John Walden has stepped down as the chairman of the Group.
• Amidst significant uncertainty anticipated for the remainder of the year around the ongoing response to Covid-19, the Board has reviewed potential scenarios for the Group's performance this year.

• The Company has delivered a 3% improvement in repeat contribution margin.

Financial Highlights (FY20 ended 31 March 2020) as reported on 24 June 2020

Net sales increased by 13.70% year-on-year and reached £202.9 million for FY20 ended on 31 March 2020. Adjusted loss before tax has been narrowed by 48.5% to £1.90 million in FY20. Sales in the US increased by 20%.

The Company has sold its Majestic Wine and Les Celliers de Calais businesses in a £95 million deal during the year. Net cash on 31 March 2020 was £55 million.

(Source: Company Presentation)

Share Price Performance Analysis of Naked Wines Plc

(Source: EODHD/Others, chart created by Kalkine Group)

Shares of Naked Wines Plc were trading at GBX 464.68 and were down by 1.34% against the previous closing price (as on 30 October 2020, before the market close at 10:20 AM GMT). WINE's 52-week High and Low were GBX 497.60 and GBX 193.80, respectively. Naked Wines Plc had a market capitalization of around £344.48 million.

Business Outlook

The Company is showing sparkling performance in FY21 driven by new customer acquisitions during Covid Pandemic period. The Board was continuously monitoring the significant progress and anticipated that net sales are going to increase by 40% year-on-year for FY21 from the conservative perspective. The industry has benefited out of Covid situation, and the wine industry has witnessed its inflection point.

Is Cake Box Holdings Plc's franchisee model working?

Cake Box Holdings Plc is the FTSE AIM All-Share listed company, is the specialist retailer of fresh cream cakes. The Company operates its retail stores under the brand name "Egg-free Cake Box".

(Source: Company Presentation)

Upcoming Event -The Company expects to publish its interim results for the six months ended on 30 September 2020 on 23 November 2020.

Trading Update (for the six months ended on 30 September 2020)

As per the update released on 12 October 2020, the Company's sales have been heavily impacted for the last half-year period as most of the shops have been closed in the UK during the six weeks lockdown. The Company reported £8.6 million of revenue for H1 FY21 while it was £8.8 million for H1 FY20. The financial performance has improved and picked up momentum after the reopening of the Company's estate as revenues of £8.6 million were reported for a 20 weeks period ended on 30 September 2020. It was £6.6 million for the same period in the prior year and surged by 12.1% year on year. Online sales have increased by 81% year on year during the reported period from the delivery through platforms including Uber Eats, Just Eat and Deliveroo.

The Company has paid a final dividend of 3.2 pence per share for FY20 on 23 October 2020. Six new retail stores have been opened during the half-year period taking the total number of stores to 139. The Group is confident regarding the franchise store rollout programme having a strong pipeline of the new franchisee. The Group is currently holding deposits for 47 sites in the UK.

FY2020 results (ended 31 March 2020) as reported on 1 September 2020

Average store sales per week for FY20 ended on 31 March 2020 were £6,300 whereas it was £6,600 for FY19. Gross profit of the Company improved from 45.7% in FY19 to 46.8% in FY20. The financial position of the Company is robust, having cash balance at year-end of £3.70 million. Net debt for the Company is a mortgage loan of £1.60 million secured by properties in Enfield and Coventry.

(Source: Company Presentation)

Share Price Performance Analysis of Cake Box Holdings Plc

(Source: EODHD/Others, chart created by Kalkine Group)

Shares of Cake Box Holdings Plc were trading at GBX 185.00 and were up by close to 3.06% against the previous closing price (as on 30 October 2020, before the market close at 10:20 AM GMT). CBOX's 52-week High and Low were GBX 193.00 and GBX 90.00, respectively. Cake Box Holdings Plc had a market capitalization of around £71.80 million.

Business Outlook

The Company is recovering from the slump that it has experienced in financial performance during the lockdown period. The Company has seen a sharp spike in online orders and, the sales had surged by 82% year on year for the last four months ended on 30 September 2020. The Board is confident that the record number of new store applications will resurrect the demand and bring it back to pre-covid levels.