Pets at Home slumps due to cost-of-living crisis biting into Britons’ pockets
RBC analysts have downgraded Pets at Home’s recommendation to Underperform as concerns mount as the cost-of-living crisis bites into Britons’ pockets.
The pet retailer’s shares today took an 8.32 per cent tumble – the biggest on the FTSE 250.
Analysts explained that while the group maintains a prime position in the pet care market, its earnings forecast of a 2 per cent growth in FY23 followed by a 12 per cent increase the following year looks too demanding.
“Pets has benefited over the last two years from its market leading position in a sector that has seen strong growth,” RBC said.
Figures showed the percentage of people that now have a pet has gone up during the pandemic, from 40 per cent in 2019 to 62 per cent now.
“Whilst we think that the defensive nature of pet care should provide Pets with some topline resilience, we think that further growth will now be more difficult to achieve in the light of rising cost of living and the benefits from higher spend on new pets fading away,” it added.
According to analysts, the group will also be impacted by higher freight and energy costs.