Pets profits hit by unexpected costs
Pets at Home has been hit by higher than expected costs in moving to a new distribution centre and implementing an ecommerce platform, but is still on course to deliver the full year profits it told the markets it would make.
Posting interim figures for the 28 weeks to 12 October 2023, the Cheshire-headquartered business made sales of £774.2m, up 6.2%.
However, the higher investment costs pushed statutory profits before tax to £34.7m, down 35.2% reflecting the costs of £13.1m associated with a write down of its investment in pet-sitting service Tailster, which it acquired in 2019, and the costs of moving store logistics operations into distribution centre in Stafford.
“This was the period of highest risk in our move to a single DC and the DC is now fulfilling deliveries to 100% of stores, with availability having now normalised,” the company said in a statement to the stock market this morning.
“We experienced a period of disruption during Q2. From the early part of Q2, we saw a deterioration in our in-store availability from normal levels of around 95%, to c80% at peak disruption. This understandably impacted our sales performance. However, the business responded quickly to address the issue and our availability and sales performance have now normalised,” the statement added.
Lyssa McGowan, chief executive, said: “H1 has been a critical period in laying the foundations of our platform for future growth. This was the period of peak activity when we relaunched our brand, launched our new DC, built our new digital platform, and made progress expanding and improving our physical assets across Retail and Vets. This period has not been without challenges, but we have been able to manage these well and are on track to finish FY24 with a refreshed, modernised infrastructure, fit to deliver growth for many years to come.
“As we stand today, past our point of peak investment, the business is in great shape with good operational and strategic momentum. We look to the future with confidence that we can deliver our plan, as set out in May, to build the world’s best pet care platform.”
The company has also been in detailed discussions with the Competitions and Markets Authority over its review into the UK veterinary sector.
The consumer regulator has highlighted concerns over the high levels of inflation in the sector, the lack of transparency around the corporate ownership of many UK vet practices, and a lack of transparency over additional services offered to consumers, such as referrals of complex treatments and diagnostics, within the same group.
The company expects no impact on growth strategy or ambitions as a result of the review.
