Pets at Home issues profit warning after retail sales fail to grow as predicted
Pets at Home has warned its profits will not be as high as previously forecast after its retail sales faulted.
The Cheshire-headquartered group said that while its third quarter saw “saw resilient growth against a challenging comparative”, progress in its retail business was “not at the levels we had expected.”
Pets at Home added that it now expects its full-year underlying pre-tax profits to be around £132m, which “assumes no sequential improvement in our retail business LFL run rate through Q4 as we trade against a period of exceptionally strong trading last year”.
The group has updated the market with its performance during its third quarter, the 12 weeks to January 4, 2024.
During that time, its group revenue increased by 4.3 per cent to £362.4m, with group like-for-like revenue up 4.4 per cent.
Its consumer revenue grew by 6 per cent while its retail sales increased by 3.5 per cent and by 3.7 per cent on a like-for-like basis.
Pets at Home added that its “balance sheet remains robust” and that it expects to finish the year in a net cash position.
Chief executive Lyssa McGowan said: “Our colleagues came together over our peak trading period to deliver a record sales performance, growing against a very strong performance in the prior year.
“While a slower market over peak meant our sales growth didn’t quite hit the levels we expected, the business remains well positioned to benefit from long term growth in the sector as we continue to win share and grow volumes across food and deliver differentiated performance through our unique vets business.
“Importantly, we will shortly follow up launching our new distribution centre with the launch of our new digital platform, in line with our target.
“Our new digital platform is a key foundation of our growth strategy, bringing vastly improved user experience to our consumers, and creating opportunities to improve cross-sell into accessories and further grow share of wallet. With these foundations now in place we are well positioned for the future.”
During the year, Pets at Home opened four new pet care centres and completed 33 refits. In its vets division, it opened three new practices, completed 16 extensions and converted eight company-owned practices to joint venture ownership.
John Coldham, co-head of the retail sector (UK) at Gowling WLG, said: “The first half of the year was challenging for the pet supplies retailer as consumers continued to battle cost of living pressures and it invested into its digital offering.
“This, coupled with the introduction of veterinary surgeries and grooming rooms, has diversified the company’s revenue stream and helped to offset the drop in profits it previously experienced.
“What’s more, VIP members for the pet specialist have been steadily growing and meant more customers are purchasing products and services, and the launch of a new app will only aid this.
“CEO Lyssa McGowan will be hopeful that the online investment will pay off and mitigate managing increased costs due to rising inflation, while a new distribution centre supports the company’s ambition for greater demand. If successful, Pets at Home will be the pick of the litter for investors.”