Pets at Home: a recession proof business

Puppy love. The City likes Pets at Home

(PA)

TWO years ago, over the sort of City lunch that was unfashionable then and is illegal now, my favourite fund manager was waxing lyrical on the merits of Pets At Home.

A brilliant business, he said, resilient to almost all trends and technological developments. You cannot, he said, replace a pet with an app.

He was particularly keen on the chain’s reluctance to sell cats and dogs since, he noted, “they live too long”. His preference, in terms of shareholder value, was guinea pigs. “Think of them like a mobile phone,” he intoned. “Obsolescence is built into the design.”

Pets at Home has its own reason for not selling cats and dogs, but those animals remain its biggest source of revenue, due to the demand for food and vet care.

Covid-19 has thrown the nation’s love of pets into the sharpest focus.

Today’s half year results speak to that with sales up 5% to £574 million . Chief executive Peter Pritchard calls it a “baby boom”, as lonely, bored or nervous folk seek solace in a new family member.

And they will keep looking after, keep feeding that family member, no matter how hard times get, no matter how many other cuts have to be made to their own budgets and lifestyles. Research proves it.

Pets at Home shares slipped a little today, but they have doubled in a year as investors other than my fund manager caught on to the idea that this is as near to recession proof as a business gets.

The company is valued at £1.9 billion. Who is to say it doesn’t have much further room for growth?