Pets at Home revenue up 8% to record £1.14 billion

Wilmslow-based pet and vet retailer Pets at Home Group said its revenue grew 7.9% to a record £1.14 billion in the 52 weeks to March 25 amid an estimated 8% increase in UK pet ownership over the past year.

Pets at Home said its underlying profit before tax was £87.5 million, ahead of guidance but representing a decline of 6.4% “post an adverse Covid-related impact on profit of approximately £30m and the repayment of £28.9m of business rates relief.”

Statutory profit before tax was £116.4 million, including £30.2 million relating to profit on the disposal of its Specialist Group.

The group said its final dividend per share of 5.5p represents an increase of 10%, giving a total dividend of 8p for the year, up 7%.

Pets at Home said its number of “Puppy and Kitten Club” members grew 60.9% with sign-ups in the second half double that of the prior year, adding that Puppy and Kitten Club members typically spend 34% per annum more than non-members.

On current trading and outlook, Pets at Home said: “The start of our current financial year has seen a continuation of the strong momentum across our retail and veterinary operations …

“At this early stage of the new financial year and considering both the ongoing momentum across our business and the continuing impact of the pandemic on operating costs, we anticipate that group underlying pre-tax profit for the 53 weeks to 31 March 2022 will be in the range of £120m to £130m.”

Pets at Home CEO Peter Pritchard said: “We ended this unprecedented year a far stronger pet care business.

“Despite challenges to how we were able to do business, we grew our market share across all channels and our underlying growth trajectory accelerated.

“Our loyalty clubs saw record periods of new customer registration, strong growth in subscription customers increased the visibility and quality of our sales profile, whilst new clients across our veterinary estate helped increase practice profitability and cash flow.

“We achieved all of this while remaining mindful at all times of doing the right thing for all our stakeholders.

“Covid-19 has structurally changed the dynamics of the pet care market.

“We estimate that the rising level of pet ownership, combined with structural demand drivers such as premiumisation and humanisation, has increased the outlook for growth across our addressable market, and in conjunction with our expectations of continuing to take market share, provides a tailwind to the £600m customer revenue opportunity we see across our business over the medium term.

“We will, as the UK’s leading omnichannel pet care provider, capitalise on this opportunity through continued investment in our infrastructure, further digitising our business and leveraging our extensive and unique dataset to provide insight throughout the customer lifetime to support investment decision-making that will drive quality and profitable growth.”

AJ Bell investment director Russ Mould said: “Hands up, who got a dog in lockdown? Judging by the foot traffic around local parks at 7am and 6pm, it seems many people did.

“Being stuck at home in 2020 and a large chunk of 2021 has seen many individuals seek a new furry addition to their family, and pet ownership has rocketed.

“That’s clearly been a tailwind for Pets at Home, but like many pandemic-induced trends it seems inevitable that pet ownership momentum could ease as we move into life beyond Covid-19.

“Pets at Home has expanded its customer base during the pandemic and it now has a large opportunity to cross-sell services such as healthcare and pet grooming.

“The beauty of pets is that owners are generally willing to keep spending regularly on their four-legged friends, thereby creating the opportunity for Pets at Home to collect a constant stream of cash.

“With this tailwind firmly in place, Pets at Home must now embrace digital technology to make it easier for customers to manage their pet needs, and ultimately make it easier for them to spend more money.

“Competition in the pet supplies space is fierce, but Pets at Home seems to be doing all the right things such as investing to improve its infrastructure and technological capabilities, as well as crunching all the data it has on customers to sharpen its selling skills.”