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Pets at Home stock pops on UK cat and dog food shortage warning

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Lucy Harley-McKeown
·2-min read
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Coronavirus has spawned a pet boom in the UK, as people took advantage of stay-at-home orders to settle in a new animal. Photo: Olivier MorinAFP via Getty Images
Coronavirus has spawned a pet boom in the UK, as people took advantage of stay-at-home orders to settle in a new animal. Photo: Olivier MorinAFP via Getty Images

Pets at Home (PET.L) stock rose 2.6% in early trade in London on Tuesday following news of a potential shortage of cat and dog food in the UK.

Meanwhile the FTSE 250 (^FTMC), which the stock is part of, rose 0.5%.

Supermarket chain Sainsbury's (SBRY.L) had sent an email to customers on Monday night warning of an "ongoing" national shortage of wet food pouches in 2021.

It said it hoped to get food back on shelves "as quickly as possible."

Coronavirus has spawned a pet boom in the UK, as people took advantage of stay-at-home orders to settle in a new animal.

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Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: "The lockdown pet boom has done wonders for Pets At Home revenues with 10% added to January’s full year profit guidance in the most recent update.

"But gross margins have been subdued to some extent by high demand for less lucrative items like pet food and cat litter. Keeping volumes high for this areas of the business is crucial and the announcement from Sainsbury’s of a shortage of cat food pouches could drive more pet owners to the chain."

Streeter says that Pets at Home promotes a subscription model with reduced prices for repeat custom, and it seems some investors see this as an opportunity for Pets At Home to attract new customers who may sign up for the longer term to avoid shortages elsewhere.

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The UK pet food industry had already been suffering due to red tape and border checks spawned by the end of the transition period for the UK leaving the European Union.

A survey carried out by the Pet Food Manufacturers’ Association (PFMA) concluded that in mid-February, only one-third of businesses that attempted exports to Europe in 2021 had been successful.

According to a report by the Financial Times, Michael Bellingham, chief executive of the PFMA, said that confusion over paperwork and a lack of detailed knowledge from government officials was hitting the EU export sector worth £285m a year.

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