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Animal spirits feed Pets At Home as pandemic lifts profit

Tanishaa Nadkar
·2-min read

By Tanishaa Nadkar

(Reuters) - Britain's Pets at Home raised its pretax profit forecast for the second time in five months on Friday after strong Christmas sales, lifting its shares higher.

Strong third-quarter sales across its retail and veterinary operations and demand for toys and accessories over Christmas and Black Friday drove the new forecast from the pet supplies firm, whose shares were up 7.9% to 451.4 pence at 0914 GMT.

Pets At Home, which operates 451 retail stores offering pet grooming services and insurance products, has been doing well throughout the coronavirus pandemic, starting in March when its sales were lifted by lockdown-led stockpiling.

"We had expected a strong Christmas from the group (noting website queues over the period), but this update is ahead of our expectations," Liberum analyst Anubhav Malhotra said.

Pets At Home said it expects underlying pretax profit to be at least 77 million pounds ($105 million) for the fiscal year ending 2021, including the previously announced repayment of 28.9 million pounds under a government relief plan.

A surge in pet adoptions during the pandemic has boosted demand for its products, while Pets At Home is also able to remain open during the latest lockdown in Britain.

"While renewed COVID-related restrictions on a national level may constrain trade, we remain an 'essential' retailer," the company said in a statement in which it said it had saw "high-teens" group like-for-like sales in December.

"Q3 has been a bumper one for Pets at Home: the tailwinds of greater pet ownership are helping and market share is being won, predominantly from the grocers," Peel Hunt analysts said.

Analysts also raised the possibility of a special dividend in 2021 due to strong cash generation.

($1 = 0.7368 pounds)

(Reporting by Tanishaa Nadkar in Bengaluru; Editing by Anil D'Silva and Alexander Smith)