Pets at Home has reported a 33.5% fall in underlying pre-tax profits to £36.2m for the 28 weeks to 9 October, as weakness in its retail division overshadowed strong performance from its veterinary business.
This was to be expected, and shares actually rose as investors chose to look past recent softness to a turnaround plan.
Group consumer revenue edged up just 0.7% to £1.06bn. Retail sales fell 2.3% to £679.9m against a flat market, with accessories down 5.9% and food declining 0.3%. The vet division proved more resilient, with revenue climbing 6.7% to £375.9m.
Interim executive chair Ian Burke, who stepped into the role 10 weeks ago, acknowledged the scale of the challenge. “It’s clear that urgent and necessary action is needed to return the retail business to growth to meet both our own expectations and those of our investors,” he said.
Investors will be encouraged by the action outlined in today’s announcement that may help revive the share price.
Burke has visited over 100 stores and launched a turnaround plan focused on product, price, execution, and cost. The company is cutting £20m from overheads through a restructuring programme costing £6-8m, with payback expected in under 12 months.
Retail underlying profits collapsed 84.1% to £3.5m as margins fell 105 basis points, hit by pricing investments, adverse category mix and lower supplier income. By contrast, vet profits rose 8.3% to £44.9m, with margins up 90 basis points to 45.7%.
The digital platform showed improvement, with second-quarter online sales up double digits. Pets Club membership fell 2.4% to 7.9m, though average customer value increased to £185.
Full-year expectations remain unchanged.
Pets at Home shares were 6% higher at the time of writing.