Pets Mean Profits as McGowan rings changes
Pets At Home cheered investors this morning with a bullish full-year profit forecast boasting strong sales of pet food and accessories over the Christmas period.
In a trading statement chief executive Lyssa McGowan said the retailer expects to make £5m more in profits for the current trading year.
The third quarter trading statement revealed 18% growth in the veterinary division and 8% in consumer retail.
Profits are expected to be between £126m and £136m pounds, compared with previous upper expectations of £131m.
Longer term, the business is investing in digital platform, with the launch of an enhanced mobile app and a new purpose-built distribution facility built and ready to open in summer 2023.
New senior leadership at the Cheshire-headquartered retailer will take comfort from the results, but is keeping a close eye on freight and fuel costs.
McGowan joined from Sky TV in June 2022 and the board appointed veteran retail leader Roger Burnley as a non-executive director in December.
McGowan said: “We delivered a really pleasing Q3 with acceleration in sales momentum across the platform. Importantly, the quality of our growth remains strong as we continue to grow volumes and attract new consumers through offering compelling value and service, in what remains a challenging inflationary environment.
“It was particularly pleasing to see our accessories category return to growth, supported by the strong performance in our Christmas range, demonstrating that consumers still want to treat their beloved pets in these challenging times. Our Vet Group continued to grow its client base, adding 8,000 new clients a week in Q3, with annualised average practice revenues now reaching £1.1m.”
McGowan has also appointed Kathryn Imrie as chief consumer officer. McGowan said: “Kathryn will bring a range of critical skills and external expertise into the business. This completes the recent changes to our executive team and marks a step-change in our journey to build a consumer-centric, omnichannel, pet care platform.”
Russ Mould, analyst at AJ Bell commented:
“We weren’t just treating ourselves over Christmas it seems – our furry friends also benefited from surprisingly resilient spending judging by the latest update from specialist retailer Pets at Home.
“The company was boosted by a big increase in the UK’s pet population during lockdown and unlike other pandemic fads this involved a long-term commitment on the part of owners.
“Pets at Home benefited from this trend in three main ways. First through people buying food, treats, bedding and toys for their animals; second as people look to keep their furry friends clean and tidy at its in-store grooming salons; and third by providing veterinary services.
“The valuation of the business previously got ahead of itself, leaving the shares vulnerable to cost of living concerns. However, this is a nation of animal lovers and while some of the little extras people splashed out on for their pets might fall by the wayside after Christmas, spending on the essentials is likely to hold up. This is bolstered by the company’s growing footprint in the vet market and by smart use of loyalty schemes.
“The strong trading shows Lyssa McGowan is doing a good job of stepping into some big shoes to fill in the form of her predecessor Peter Pritchard who led a successful turnaround of the business.
“She still needs to navigate inflationary pressures and stay ahead of the game when it comes to fighting off competition from non-specialists like the supermarkets, but she’s undoubtedly off to a good start.”