CVS reaps longer-term rewards of last year’s lockdown pet boom
Veterinary services group CVS has reaped the rewards of the UK’s increasing number of pet owners, with its pet health care plan hitting 455,000 members over the past year.
Revenue hit £510.1m in the year to 30 June, up by 19.2 per cent in comparison with 2020’s figure – signalling the longer-term impacts of last year’s lockdown pet boom.
Shares soared a little over 12 per cent to a total share price of 2,795.00 in the group’s afternoon trading.
Chief Executive Richard Fairman hailed the “very strong performance”, as basic earnings per share climbed from 8.1p to 27.3p over the 12-month period.
The last year has provided many challenges across the veterinary services industry, the group said in a statement, which Fairman put down to “a difficult backdrop of restrictions and evolving regulatory guidance”.
Operating profit surged more than 116 per cent from £18.5m to £40.1m in the period, as the group had fewer restrictions to tackle as the year went on.
CVS’ pet health care plan, Healthy Pet Club, enjoyed a 7.9 per cent lift to paid members by 31 August, in comparison with last August.
“We see a number of opportunities to grow the business, through favourable consumer trends, further improving our specialist offering and by continuing to make investment in support,” Fairman added.
“Although management expectations for the full year are not based on attaining annual growth at the high levels of the first two months, the very positive start to the new financial year is encouraging.”
Longer-term rewards
With a pet for life and not just for Christmas – the group will likely continue to enjoy the benefits of having an “organic engine driver” as opposed to relying on “favourable market dynamics”, Equity Analyst at Hargreaves Lansdown Sophie Lund-Yates explained.
“The vet-clinic giant is barking up the right, very fruitful, tree. A huge boom in pet ownership over lockdown – there are now over 24m cats and dogs in the UK – means more trips to the vets and more online pet food orders, and that means a ballooning revenue stream for CVS.
“What’s particularly impressive is that even when you strip out the effects of lockdowns, growth has been very impressive.”
Though it seems no business model is immune to the current labour shortages the UK has been grappling with in recent months.
“Things to watch out for include a very tough labour market in the veterinary sector because of skills shortages. CVS’ good reputation and improved remuneration packages should help it with staff retention and attraction, but it’s an ongoing battle and one CVS has lost in the past.
“Failure to secure enough high-quality veterinary surgeons and nurses is a risk for the group.”