Pets at Home predicts £2.3bn customer revenue

Wilmslow-based pet and vet retailer Pets at Home Group said on Tuesday its first-half revenue grew 18% to £677.6 million as membership of its “Puppy and Kitten Club” grew 107% year-on-year with members “typically spending a third more per annum across the group compared to non-members.”

Group underlying profit before tax grew 77.2% to £70.2 million in the 28-week period to October 7, 2021.

Interim dividend per share is 4.3p, an increase of 72% year-on-year “reflecting continued strong cash generation and a robust balance sheet.”

Pets at Home said it made no change to its full year guidance with FY22 group underlying pre-tax profit anticipated to be at the top end of the current range of analyst expectations.

The company-compiled consensus estimate of analyst expectations for the 53-weeks FY22 full-year post IFRS-16 underlying pre-tax profit is £131 million, with a range of £128 million to £135 million.

The stronger than expected and continuing growth in the pet population over the past eighteen months is materially increasing the size of our addressable market,” said the Wilslow firm.

“In conjunction with our continued strong performance and good progress across strategic initiatives, we now see a pathway to £2.3bn of customer revenue across our business over the medium term, compared to the £1.4bn achieved last year.”

Pets at Home shares rose about 6%.

Pets at Home CEO Peter Pritchard said: “Our business has never been more robust.

“Our pet care strategy continues to deliver, we continue to take market share and improve spend per customer and the benefits of our investment in capacity and capability are really starting to deliver.

“Notwithstanding some near-term, industry-wide challenges, we continue to grow ahead of our plans and, based on trading year to date, we are on track to report a record year of sales and profit growth.”

AJ Bell investment director Russ Mould wrote: “The race to buy pets during the pandemic has pepped up Pets at Home no end.

“Many people introduced a feline or canine addition to their household during lockdown and now these furry friends need looking after.

“Where Pets at Home deserves credit is in sharpening its proposition to take advantage of this wave of new business.

“Demand not just for goods like food, treats and toys but also for veterinary and grooming services has shot up and Pets at Home has been well placed to take advantage as previous investment in boosting its paw print and adding new expertise has paid off.

“With an enhanced digital offering, which includes customers being able to contact and interact with staff through live feeds from the comfort of their own home, and a burgeoning VIP loyalty card scheme, Pets at Home has been able to take market share from smaller, less robust competitors and protect its position from the threat posed by non-specialists like the big supermarkets.

“The main cloud on the horizon is the looming departure of the man who helped make all this possible: current CEO Peter Pritchard.

“His will be a hard act to follow when he walks away next summer, though at least he leaves a business which is in very healthy condition.”