Pets at Home LFL revenue grows 6% to £404.7m in Q1 as pandemic pet boom drives demand

Pets at Home shares gained 0.3% to 338.6p in early morning trading on Friday after the group reported a 6% like-for-like revenue increase to £404.7 million in Q1 2023.

The pets care company announced a 7.1% total revenue climb to £404.7 million.

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Pet at Home highlighted strong customer acquisition, with 1.1 million new customers in the last year.

“First quarter performance was solid, with new customer growth continuing and crucially strong retention of the 1.1m customers added last year,” said Hargreaves Lansdown equity analyst Matt Britzman.

“The pandemic fuelled pet ownership craze was a blessing for Pets at Home and those cats and dogs will need looking after long into the future.”

“Attracting and retaining subscription-based revenue is a great strategy, the VIP and Puppy & Kitten Club continue to push on which gives attractive recurring revenue sources.”

Meanwhile, the group mentioned strong sales to profit conversion as it continued to proactively manage inflationary costs via a range of productivity and efficiency initiatives.

“Our performance has remained strong in the first quarter, underpinned by continued customer growth and high levels of retention,” said Pets at Home CEO Lyssa McGowan.

“We operate a unique omnichannel model, in a market in structural growth, where the passion and expertise of our colleagues and partners is a key competitive advantage.”

“I would like to thank them for their warm welcome, their continued efforts in helping our record number of customers care for their pets in these challenging times, and their ongoing commitment to building the best pet care business in the world.”

Pets at Home noted a good balance sheet with net cash of £40.2 million and decent liquidity through its recently renewed £300 million revolving credit facility until 2027.

The firm added the vast majority of its currency requirements were hedged over the coming year.

The animal supplies company confirmed it would also be progressing with its previously announced £50 million share buyback programme.

“What’s very interesting with Pets at Home is its hybrid approach, omnichannel revenue continues to grow and was the standout this quarter,” said Britzman.

“That’s testament to a lot of work that’s gone into boosting the online offering, with services like click and collect meaning customer journeys are a mix of online and in store.”

“That’s a gold mine for cross selling other services like the groups in store vet and grooming practices.”

Pets at Home said there were no changes to its sales and margin outlook, with a FY group underlying pre-tax profit to be in line with analyst expectations of £131 million, with a range between £127 million to £136 million.

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