Investors are tucking in to posh cakes and casual dining chain Patisserie (CAKE:AIM) after the £338 million cap reports double-digit growth despite fierce competition.
The group, which owns Patisserie Valerie and Baker & Spice, grew pre-tax profit by 20.6% to £8.4 million in the six months to 31 March, with revenue 14.4% higher at £50 million.
The growth, which has been driven by the opening of 12 new stores, rising footfall and an increase in spend per head, sends the shares up 4.4% to 352.8p.
Patisserie chief executive Paul May says he’s confident of achieving its full year target of 20 new stores, despite the market being extremely competitive.
He says the problems encountered by Restaurant Group (RTN) are specific to the company, noting its heavy presence in retail parks and significant management changes.
‘We’re more diversified in our locations. Our offering is closer to Starbucks and Pret, whose like-for-like sales have held up better,’ May says.
FinnCap analyst Roger Tejwani says Patisserie has well-positioned, vertically integrated brands which straddle two growth markets: coffee and casual dining. There are no sizeable direct competitors and it has a strong balance sheet, with net cash of £8.9 million.
Tejwani says this justifies the fact the group trades on a 2017 price to earnings ratio of 23 times.
We highlighted the share price growth potential of Patisserie in last week’s Shares. You can read the article online here.
