Pet care group anticipates better underlying profit levels
Reinforcing the maxim that whatever economic and political doubts prevail people will always look after their pets, Cheshire pet care business Pets at Home, said it expects underlying profits to be slightly above current market expectations – between £79m and £90m – as last year’s strong performance continued into its first quarter trading.
In an update to the market covering the March 29-July 18 period, the Handforth-based group said it has made a strong start to the new financial year, delivering its pet care strategy.
The group reported revenue growth of 9.9%, to £30.4m. Retail revenue was up 8.7% to £266.4m, including omnichannel2 revenue up 36% to £26m, while retail like-for-like revenues were 8.2% better.
Vet Group revenue rose 18.8% to £37m, while like-for-like revenues were 6.2% ahead, with like-for-like joint venture fee income up 1.1% to £16.2m, reflecting the planned impact of the group’s fee remediation measures.
Today’s update said Vet Group underlying performance is in line with group plans, with the financial impact of buying out a number of joint venture vet practices comfortably within expectations.
The forecast of slightly better underlying profit levels is based on good transaction and cash growth in retail, particularly in food and omnichannel where strong growth has more than offset adverse margin mix, and the Vet Group underlying performance in which is line with plans, with the financial impact of buying out a number of joint venture vet practices comfortably within expectations.
On a strategic level, the group said today that the number of subscription customers – those signed up to a Vet Group health plan, omnichannel subscription platforms Easy Repeat and Subscribe & Save, or Bubble Bundle – across the group now numbers more than 765,000.
In retail, group investment in convenient, competitive and innovative shopping has brought success across categories, in particular with acquiring new customers and their pet food shop.
The Vet Group recalibration is on track, with the buyout and closure of practices largely complete, and the group has formed a strategic partnership through an investment in Tailster.com, a leading online marketplace in the UK for pet walking, sitting and boarding services, which will enhance our the group’s care services to customers
Chief executive Peter Pritchard said: “The momentum with which we exited FY19 has continued into the first quarter of FY20.
“We have seen a strong sales performance across the business, particularly in retail where like-for-like sales were 8.2% – an impressive 14% on a two year basis.
“We are also making good progress in our Vet Group. Our plans to buy out a number of joint venture vet practices have been carefully executed, whilst performance in the ongoing estate remains strong.
“We have the right foundations in place to accelerate the maturity of our vet practices in a sustainable way, delivering cashflow benefits to both joint venture partners and Pets at Home.”
He added: “At this early stage in the year, and with ongoing uncertainty across the wider retail sector, we remain cautiously optimistic and focused on delivering our pet care strategy.”
Russ Mould, investment director at Manchester investment firm AJ Bell said: “Running a pet store should be a no-brainer.
“We are a nation who love animals and will spend large amounts of money on them, whether that’s food, accessories or vet bills.
“Unfortunately when the market opportunity is that clear you naturally get a lot of contenders vying for the same share of the consumer’s wallet.
“Pets at Home has had to fight off competition from both offline and online players and has been through a very difficult few years. The latest trading would suggest it is bouncing back with gusto.”
He added: “Offering the right products at a fair price and delivering excellent customer service is the key to success in retail and there are early signs that Pets at Home has regained its focus and is doing the right thing.”
