The pet house’s share price fell as lower-than-expected sales in the third quarter prompted it to cut forecasts.
At 284p per share, the FTSE 250 company was trading 3.1% lower in Tuesday’s trading.
Revenue at the retailer and veterinary services provider rose 4.3 per cent to £362.4 million in the 12 weeks to 4 January. On a like-for-like basis, sales rose 4.4 percent year over year.
Turnover in the firm’s core retail unit grew by 3.5% or 3.7% on a like-for-like basis. Sales of pet food, accessories and the like across the division accounted for around 70% of group turnover in the first half of the financial year.
Pet House called retail sales “resilient against last year’s very strong performance” and added that “we were pleased to see volume growth and gains in food offset against market slowdown.”
However, sales were lower than forecast which led the company to lower forecasts. Pre-tax profits for the full year (to March 2024) are now reported at £132 million. Pets recorded profits of £122.5 million during fiscal 2023.
Pets at Home said sales at its veterinary unit rose a more impressive 13.4 percent (or 13.3 percent). The firm commented that the growth was due to “good progress in onboarding vet talent and continued growth in average spend, pricing mix and a shift to more advanced processes”.
Record sales performance
“Our partners came together in our strongest trading period to deliver a record sales performance, building on last year’s very strong performance,” said chief executive Lisa McGowan.
He added: “While the slower than peak market means our sales growth has not been at the level we had hoped for, the business is well positioned to benefit from long-term growth in the sector. is because we continue to win share and grow volume in food and beverage. We deliver differentiated performance through our unique vet business.”
McGowan said the firm would soon follow the opening of a new distribution center with the launch of a new digital platform, which he described as “a key pillar of our growth strategy.”
The new platform will “greatly improve the user experience for our customers” as well as “create opportunities to improve cross-sell across accessories and further increase share of wallet,” he said.
In the doghouse
Hargreaves Lansdown analyst Sophie Lund-Yates commented that the “profit cut will not be taken kindly by investors, who have long appreciated the brand as a resilient option amid consumer pressures.” “
“Pet owners often shy away from buying more lucrative, but less essential, extras for their furry companions amid the pressures of precious lives,” she added.
Lund-Yates noted that Pets at Home has introduced initiatives such as store renovations and bringing new brands online to improve sales. However, he said there is “no clear path forward” for the company to overcome its current difficulties.
“The new digital platform may help spark some more activity but given the highly physical nature of the pet’s domestic appeal, it may not be the hope of all treatment administrations,” he added. said