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Pets at Home rides the “baby boom” wave

Simon English
·5-min read
<p>PDSA is warning dog owners to keep their eyes on what pets eat over the festive period</p> (PA)

PDSA is warning dog owners to keep their eyes on what pets eat over the festive period

(PA)

Why were group sales up in the past six months?

We were fortunate to be classified as an ‘essential’ retailer, so we were able to continue trading and our stores remained open, we traded strongly in very challenging times.

We also witnessed a leap in pet ownership, rather like a ‘baby boom’, during the pandemic. With more people working from home and people having to self-isolate, growing numbers have been turning to pets for companionship.

We don’t sell cats or dogs but we have seen a strong increase in sales of items such as beds and cages that people need when they first buy a pet as well as an increase in things like puppy food and a 25% increase year on year in our Puppy and Kitten Club membership.

This feels like a structural change and something that will benefit our business for years to come.

Why are H1 profits down?

The first three months coincided with the start of the lockdown and sales suffered. We saw a strong recovery in Q2 but we have incurred significant additional costs during the six-month period. These include one-off costs of £8m to make stores safe for colleagues and customers and £4m a year of ongoing costs. We also lost some revenue in Q1 as the services that vets were allowed to provide was restricted and we chose to stop some services, such as grooming and to stop selling pets to reduce footfall and help with social distancing. It amounted to a £25m drag on profits.

You received £15m in rates relief. Will you ‘repay’ this given trading was so strong?

We are very appreciative of this support. It enabled us to continue trading, pay all our people without taking any government money from the furlough scheme. It also meant that we continued to pay landlords all our rents in full and on time, but it was not enough to cover £25m of lost revenue and additional costs. We expect profits for the full-year to be very similar to last year’s total of £93.5m.

How are you adapting the business to cope with the growth of ecommerce in the pandemic?

We have seen a sharp acceleration in our omnichannel business since the start of the year. It accounted for more than 15% of our retail sales in H1, up from 10% in the same period last year.

We have done several things to help meet this demand and enable pet owners to shop when they want, where they want and when they want.

The biggest of these will be the launch of a one-hour click-and-collect service, utilising our nationwide network of 451 stores. It used to be that online orders would come from a central distribution centre in the Midlands, even if your local store two miles away had what you wanted. A new high-tech order management system means goods now come from store which is quicker for customers and more efficient for us and more environmentally friendly.

We also launched a ‘Call-and-Deliver-to-Car’, designed to meet the needs of the most vulnerable., it enables customers to order by phone or online and, with the help of a QR code, get goods delivered to the boot of their car, avoiding any human contact. We pioneered this in Leicester during the severe lockdown there and have now rolled it out to about 100 stores.

What about stores?

We are investing in stores which we see as a crucial part of our offer, where customers can come for advice and services such as grooming as well as to buy things. We have [18] new, experiential pet care centres, which include spaces for puppy training and children’s birthday parties as well as products. We have two of these new format stores just opening in London, the first in the capital, in Camden and Putney and will be trialling other new formats within the M25, in the near future, when the pandemic permits.

How have your colleagues coped with trading through the pandemic?

I’m immensely proud of the tireless efforts of colleagues who have regularly gone the extra mile.

It helps that a huge number of them are pet owners themselves so they wanted to keep doing what they could for pet owners.

What have you done to recognise their efforts?

We paid a one-off ‘thank you’ bonus of £1.9m in the summer and, for the first time ever, we will not be opening stores on Boxing Day so colleagues can have an extra day with their families. As Boxing Day is a Saturday this year it would have been a busy day, but we think colleagues deserve the break.

We’re also giving them all a £50 grocery voucher to contribute to the cost of Christmas as another way of saying ‘thanks’.

How expensive is it to own a cat or dog?

If you buy a puppy it can cost anywhere between £1,000 and £1,500 a year by the time you factor in vet bills, insurance and equipment as well as food. If you think that dogs typically live around 10-12 years that’s £10,000 - £18,000 over its lifetime.

This is why we would stress that a pet is for life, not just for Covid or Christmas. It requires a significant commitment but, of course, it is almost impossible to measure what you get in return in terms of fun and companionship.

How do you feel about the longer-term prospects for your business?

The UK pet market is worth £6.5 billion a year and we are in a strong position within that market which continues to grow.

We have 451 stores, 440 vets, 320 groom rooms and a rapidly growing ecommerce offer. We also have hugely informative data from our loyal and growing army of six million VIP members.

It adds up to a unique eco-system designed to meet all the needs of a nation of animal lovers.