Paws for thought as Pets at Home customers go crazy for posh dogfood
Pets at Home has posted strong sales growth in its third quarter – thanks, in part, to a craze for "advanced nutrition" for their pets. Only the best for little Fido…
The numbers
The retailer posted like-for-like sales growth of 2.2 per cent in the 12 weeks to 1 January, with 1.7 per cent growth in merchandise, which was boosted by aforementioned advanced nutrition. Revenues in the division rose 5.4 per cent to £177.3m.
Meanwhile, its services division – veterinary and grooming services – rose 8.5 per cent, with revenues up 27.4 per cent to £17.8m.
That pushed total revenues up 7.1 per cent to £195.1m.
The company added that it had opened seven new superstores, 15 grooming salons and six veterinary practices.
Shares in the company were up 4.9 per cent at 244.5p this morning – making it one of the few risers on the FTSE 250.
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Why it's important
Pets at Home was one of an early wave of post-crisis IPOs to take place in 2014. Although shares performed strongly in the first half of last year, in recent months they have fallen as markets became uncertain.
But doggy dressing up outfits and advanced nutrition for felines is big business. The company has a strict schedule for growth: by the end of 2016, it wants to have delivered 20-25 superstores, 50-55 vet practices and 55-60 grooming salons.
The company added that it has bought Anderson Moores, a specialist veterinary hospital based in Winchester.
In December, the company launched a trial convenience store concept in Dorking called Whiskers 'n Paws, targeting high street shoppers, as well as a fourth high-end dog specialist store called Barkers.
What Pets at Home said
Nick Wood, the company's chief executive, said:
We are pleased with the improved trading momentum in our Merchandise business, alongside continued strength in our vet and grooming services. We are also delighted with our acquisition of one of the UK's leading specialist hospitals, Anderson Moores, which further develops our presence in this important strategic segment of the veterinary market. I would like to thank all our colleagues for their hard work through the busy festive period. We look forward to further growth and expansion in 2016
What analysts said
Keith Bowman, equity analyst at Hargreaves Lansdown, said:
In all, investors may be breathing a sigh of relief. Current trading provides reassurance, growth in services such as veterinary facilities continues to be pursued, whilst new store openings remain ongoing. Furthermore, potential to expand overseas cannot be ruled out, whilst hopes of increased shareholder returns going forward also persist. On balance, analyst consensus opinion currently points towards a buy.
In short
Shares may have fallen in recent months, but a 7.1 per cent rise in sales should be enough to give investors paws for thought.