Pets at Home trims forecast as sales growth disappoints

Lyssa McGowan, Pets At Home CEO

Wilmslow-based pet and vet retailer Pets at Home Group trimmed its annual profit forecast on Tuesday as the firm’s CEO said sales growth during its peak trading period “didn’t quite hit the levels we expected.”

Pets at Home said it now expects underlying profit before tax of about £132 million, down from a previous target of about £136.8 million.

The firm said in a third-quarter trading statement for the 12 week period to January 4, 2024, that revenue rose 4.3% in Q3 to £362.4 million.

“While Q3 saw resilient growth against a challenging comparative, growth in our retail business was not at the levels we had expected,” said Pets at Home.

“As such we now expect FY24 group underlying PBT to be c£132m, which assumes no sequential improvement in our retail business LFL run rate through Q4 as we trade against a period of exceptionally strong trading last year.

“Our expectations of our Vet Group performance are unchanged.

“Our balance sheet remains robust and we expect to finish the year in a net cash position, having returned over £100m to shareholders via ordinary dividends and our ongoing share buyback.”

Pets at Home CEO Lyssa McGowan said: “Our colleagues came together over our peak trading period to deliver a record sales performance, growing against a very strong performance in the prior year.

“While a slower market over peak meant our sales growth didn’t quite hit the levels we expected, the business remains well positioned to benefit from long term growth in the sector as we continue to win share and grow volumes across food and deliver differentiated performance through our unique vets business.

“Importantly, we will shortly follow up launching our new distribution centre with the launch of our new digital platform, in line with our target.

“Our new digital platform is a key foundation of our growth strategy, bringing vastly improved user experience to our consumers, and creating opportunities to improve cross-sell into accessories and further grow share of wallet.

“With these foundations now in place we are well positioned for the future.”

Sophie Lund-Yates, lead equity analyst, Hargreaves Lansdown, said: “Rather than contending with unruly puppies, Pets at Home is dealing with a sales performance that’s fallen far out of line.

“The profit downgrade won’t be taken kindly by investors, who have long been hailing the brand as a resilient option amid consumer pressure.

“Food sales are moving in the right direction but have lost some steam, although these remain stronger than accessories.

“Pet owners are continuing to shy away from buying more lucrative, but less essential, extras for their furry companions amid cost-of-living pressures.

“Pets at Home is doing all it can to stoke growth which has reduced to embers. This includes bringing new brands online as well as making stores more attractive.

“Unfortunately for now, there isn’t a clear-cut path through this.

“The new digital platform could help spark a bit more activity but given the very physical nature of Pets at Home’s appeal, it may not be the cure-all management’s hoping for.”