City round up: Pets subdued; JD Courir deal agreed; Strix revises targets; Gateley growing
Pets at Home has reported slowing growth due to a subdued pet retail market.
With revenues growing to £789.1m (2023: £774.2m) for the half year to the end of September 2024, pre-tax profits were £51.1m, up from £34m in the same period last year.
However, Lyssa McGowan, Pets at Home CEO issued a cautionary statement this morning, saying: “The first half of FY25 was characterised by a subdued market, against which we outperformed. In Vets, our differentiated joint venture model continues to drive material outperformance over peers. In Retail, our customer satisfaction is excellent, our price position is strong, and we have tight control of our cost base.”
Noting savings through the opening of the new Stafford distribution centre, and a new digital platform which has seen app sales almost double she also said investment to improve and open stores has continued with 3 new sites and 14 refits in the first half of the financial year.
“However, we are operating in an unusually subdued pet retail market which we now expect to continue through H2. We are confident this will be temporary, and growth will return to historical norms with the longer-term attractive outlook for the UK pet care market unchanged.
“The bulk of our investments and peak operational risk are behind us and our market leadership and well invested platform underpin our confidence in continued outperformance.”
Analysts at investment bank, Panmure Liberum, retained their Buy call on the company’s shares today.
Wayne Brown and Anubhav Malhotra, said: “A soft retail market is leading to a guidance cut resulting in between 4-6% cuts to consensus FY25E PBT.
“We extend this to FY26 and FY27 retaining a cautious view on the UK post-budget.
“This does not reflect our optimism and high degree of confidence in how the one-digital platform should drive spend and frequency, but more reflects the higher cost environment that the Government will strangle most companies with and how difficult it will be to drive profits in this environment.
“In fact, we would hope our top line assumptions are prudent reflecting the power that is yet to be seen from the new digital platform and a return to more normalised market growth dynamics.”
They add: “The shares remain a BUY as FCF Yield of 8-9% and a dividend yield of 5-6% is highly attractive even though earnings momentum slows to low-single digit %.”
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Courir, a major European sportswear chain
JD Sports has formally completed the €520m acquisition of French sportswear retailer Courir.
The European Commission cleared the deal in October.
Régis Schultz, CEO of JD Sports Fashion Plc, said: “The completion of our acquisition of Courir is an exciting milestone for our Complementary Concepts strategy in Europe and we look forward to working with its experienced management team as we deliver on our growth plans. This acquisition will broaden the JD Group’s customer reach adding a more female, fashion-conscious and older customer base to complement the Group’s core customers.”
Courir is a market leader in selling trainers in France and has 323 stores currently bannered as Courir across France, Spain, Belgium, the Netherlands, Portugal and Luxembourg. In addition, there are a further 36 stores which trade under franchise agreements as Courir in North West Africa, Middle East and French overseas territories. Further, there are three stores which trade as Naked, an elevated concept for women’s sneakers.
In accordance with the European Commission’s conditional clearance decision, 15 of Courir’s stores in France and all of Courir’s six stores in Portugal will be divested to Snipes during Q1 FY26. In accordance with Commitments given to the European Commission, these stores will continue to be operated under the Courir banner until divested to Snipes.
Courir reported revenue of €725.8m and profit before interest and tax of €50.3m.
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Strix PLC
Adjusted profit before tax targets have been revised at Strix Group, the Isle of Man-based designer and manufacturer of kettle safety controls and other complementary water temperature management components.
In September this year the group said it expected to deliver full year results in line with market expectations.
But in a trading update today for the year ending December 31, 2024, it said it now expects to report adjusted profit before tax in the range of £18m to £19m, on a constant currency basis.
This is due to lower trading in some areas.
It said, as highlighted in the group’s interim results, the Kettle Controls division experienced relatively lower trading for parts of Q3 2024, and this has continued into Q4 2024, particularly in regulated markets.
It revealed that, following the recent Canton Fair where the group had the opportunity to engage with its key customers and partners, it has become apparent that the improvement in sales trends experienced in the Kettle Controls markets in the first six months of the year was due to a pipeline refill.
The peak season has not shown an underlying improvement in consumer demand.
Also, the impact of cost price inflation has been compounded by uncertainty leading to more cautious discretionary spending around the UK Autumn Budget.
In terms of the wider group, Billi is performing well with a positive increase in sales in Europe following successful progress on the division’s geographical roll-out strategy.
The Consumer Goods division is expected to deliver revenue in the second half of the year broadly in line with the same period last year following the previously announced restructuring initiatives.
Strix said significant progress has been made on the balance sheet in the first half of the year, providing the group with additional resilience and flexibility to weather the current macro headwinds. This has also been aided by the restructuring efforts carried out during the year at pace. The group continues to evaluate medium term opportunities for profitable growth, it said.
Strix’s debt position has remained a priority for the management team, with latest reported net debt leverage at c. 2x. Reflecting management’s confidence in the underlying business, it remains the intention to reinstate the FY24 final dividend for payment in 2025.
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Gateley’s chief executive Rod Waldie believes the professional services group “has good momentum” after achieving a 5% increase in revenues and underlying profits in the first half of the year.
The Birmingham-headquartered group has told shareholders that its “increasingly diverse business lines combined to deliver a strong performance” in the six months to October.
Gateley has expanded from its law firm origins to include property consultancies, a tax consultancy, business psychologists, and leadership development companies.
Waldie said: “I am pleased with the Group’s performance in H1 25 and the ongoing improvement in activity levels as the financial year progresses, which means that we have good momentum into H2.
“The Group continues to benefit from the resilience created by our strategy of investing in a diverse and complementary range of professional services. We are pleased that our more recent organic investments are beginning to generate positive returns alongside the strong performance from our recently acquired businesses.”
Group revenue is expected to be at least £86.0m, with underlying pre-tax profits up to £10.5m. It is forecasting it will meet market expectations of £184m revenue and underlying profits of £24.1m in the current financial year.
The changes to National Insurance contributions announced in the budget last month will add £1.8m to its costs next year, but the group said it will “mitigate these costs through pricing and efficiencies”.
