Pets at Home has hailed “better momentum” despite falling profit, as the firm battles against muted demand for vet services due to the huge number of pets bought during lockdown.
The FTSE 250 pet supplies retailer and veterinary group saw profit before tax dip by 28 per cent to £86.5m, while group revenue fell by one per cent to £1.47bn in the year to March.
Investors had been hoping for signs of a turnaround under new chief executive James Bailey, after the retailer’s previous boss quit amid falling sales.
A large part of Bailey’s turnaround plan focuses on Pets at Homes’ retail arm, where consumer revenue fell by one per cent to £1.3bn due to a “subdued market backdrop”.
But the company said it is also seeing “subdued” demand in its vet group, due to the “natural ageing of large pandemic pet cohorts”.
The firm said its plan to overhaul its retail business is beginning to pay off, as sales and volume growth sped up towards the end of last year.
Ex-Waitrose boss takes the reins
Bailey said: “Material progress has been made over the past 6 months stabilising the Retail business, delivering improved satisfaction and better availability.
“We have the opportunity now to build momentum through profitable volume led growth in Retail while continuing to execute the proven growth levers of our Vet business and launch our Insurance offering.”
Pets at Home underwent a tumultuous period last year when a flurry of profit warnings preceded the departure of former chief executive Lyssa McGowan.
Bailey, a former boss of Waitrose, took the reins in March after interim head Ian Burke had unveiled an ambitious turnaround plan which included cuts to back office jobs, heavy discounting and product revamps.
The firm cut prices on around 1,000 products in a bid to defy a slump in demand caused by falling consumer confidence.
The retailer said on Wednesday that it has seen consumers respond positively to these price cuts.
Pets at Home said it has seen consumer satisfaction jump by four per cent in its retail branches and 1.5 per cent in its veterinary arm.
‘Disruptive’ move into pet insurance
The retailer saw pre-tax profit jump by 10 per cent to £83m in its vet group, as it accelerated expansion with eight new practice openings in the year to March.
Ramping up its vet arm is part of Pets at Home’s strategy to lean in on its “unique strengths” during the turnaround, the firm said.
“As the only UK pet care specialist with highly complementary exposure across omnichannel retail, vets and soon insurance, we have considerable advantages which are difficult for our competitors to replicate,” it said.
The company is set to open its “disruptive” insurance arm later this year, with the firm hoping that entering this £2bn market will complement its retail and vet arms.
Shares in the firm sit close to its lowest level in nearly seven years. The stock closed level on Tuesday, at 185p, and is down five per cent in the year so far.
