Animal ownership boom boosts Pets at Home profits but supply chain costs bite
Pets at Home continued to enjoy strong growth from the animal ownership boom during the pandemic, revealing that profits are likely to be ahead of expectations.
Bosses said sales hit £319.4 million in the 12 weeks to December 30, a jump of 5.8 per cent on the same period a year earlier.
Its retail business enjoyed particularly strong growth during the run-up to Christmas, up 9.8 per cent as customers turned to more premium brands to pamper their pets. The company’s vet business saw sales up 4 per cent.
But the company warned that inflation pressures hitting the economy are starting to take hold, with supply chain costs increasing.
In a trading update, Pets at Home said: “We, like many others, are witnessing a number of inflationary pressures across the supply chain. While we are not immune to these challenges, we are proactively mitigating them through a series of planned initiatives.”
The retailer said these include targeting rent reductions, procurement savings and “operational efficiencies”.
Despite the cost pressures, bosses are confident that underlying pre-tax profits will beat expectations, coming in at at least £140m.
There was strong growth in Pets at Home's VIP loyalty scheme, up 13 per cent year on year to seven million members, with more than one in four shopping across stores and online.
Its puppy and kitten club membership levels jumped 60 per cent, with 24,000 new members registering every week, and bosses pointing out that members typically spend a third more than non-members across the group.
At the company’s First Opinion vet practices, new client registrations came in at about 9,200 a week.
Group chief executive Peter Pritchard said: “Our unique, omnichannel pet care strategy continues to deliver strong revenue growth, reflecting continued momentum in customer acquisition, engagement and spend as the benefits of our ongoing investment in capacity and capability really start to deliver.”
The boss announced his retirement from the business in November last year; however, there was no update from the company on who will succeed him when he stands down in the summer.
The firm added: “The search for his successor is well advanced and a further announcement will be made in due course.”
Freetrade analyst Gemma Boothroyd said: “Pets at Home just served up a hefty portion of revenue growth for hungry investors to sink their teeth into.
“VIP memberships and veterinary clinics have proven a fantastic upsell opportunity for Pets at Home. These services don’t just lure customers into its physical locations where they’re more likely to browse around and spend more.
“They’re also exactly how Pets at Home can continue to carve out a niche against Amazon. In-person services will be vital for the retailer as it continues to prove its differentiation from the Bezos behemoth.”
Eleonora Dani, an analyst at brokerage Shore Capital, noted: “Pets at Home has delivered a solid trading update.
“The UK pet care market remains robust, with continued strong growth in new pet-owner customers, and the search for Peter Pritchard’s successor is well advanced.”