Pets at Home revenue +15% to £1.3bn; plans buyback

Shares of Wilmslow-based pet and vet retailer Pets at Home Group rose about 10% on Wednesday after it said its revenue grew 15.3% to £1.317 billion in the 53 weeks to March 31, 2022, “with a further 1.2m million new puppy and kitten customers in the base …”

Profit before tax rose 39.8% to £148.7 million. Total dividend for the year is up 48% to 11.8p.

Further, the company said that with its strong balance sheet it intends to launch a 12 month share buyback programme of up to £50 million.

On current trading and outlook, Pets at Home said: “The pet care market remains robust and in growth, with registrations into our Puppy & Kitten club continuing well ahead of pre-pandemic levels and growth in customer spend maintained across all categories and channels.

“Our pet care strategy continues to deliver, the advantages of our omnichannel model in consistently taking market share by making pet care affordable, easy, and convenient are clear, and our ongoing investment into capacity and capability is achieving good return …

” … we currently anticipate that FY23 Group underlying pre-tax profit will be £131m, compared to £126.4m for FY22 on a 52-week basis.”

Outgoing Pets at Home CEO Peter Pritchard said: “Despite another period characterised by significant and evolving external challenges, our performance this year has been noteworthy, delivering record sales, profit, and cash flow …

“We are well placed to accelerate our growth in market share. 

“The robust backdrop of the UK pet care market, coupled with our clear strategic priorities, proven omnichannel model and strong executive team, mean that I hand over leadership of this great business to Lyssa McGowan with the utmost confidence that Pets at Home will continue to create value for all stakeholders in both the near and longer-term.”

Pets at Home said in February it appointed McGowan — the outgoing chief consumer officer at Sky UK Limited — as group chief executive officer with effect from June 1, 2022. 

Hargreaves Lansdown equity analyst Matt Britzman said: “Record new VIP customers mean cash is flowing through Pets at Home and markets have reacted with a pop in the share price.

“The strong performance and balance sheet with net cash mean investors are being rewarded with a £50m buyback as pet ownership shows little sign of slowing down.

“The UK pet market’s grown 4% per year on a compound basis over the past 5 years and continues to look strong as the pandemic fuelled surge in pet ownership doesn’t look to be going anywhere.

“Revenue’s outpaced that, growing around 10% over the same period which is testament to the work done at Pets at Home to push the omnichannel experience and sign customers up to the pet care ecosystem with subscription services now generating over £120m in recurring revenue.

“Inflationary pressures are lingering in the background, but Pets at Home looks relatively resilient in face of those challenges with a large portion of goods sourced locally and costs initiatives in place easing the pressures.

“Lyssa McGowan steps into the CEO hotseat at the end of May as Peter Pritchard steps aside after an 11-year stint, and it looks to be a good time to take the reins.”