Yahoo Finance Pets at Home in rude health thanks to veterinary operations
Animal owners looking for a “one-stop shop” for their pets have boosted the performance of retailer Pets at Home.
Annual results for the company, which operates almost 440 superstore outlets and the UK’s largest veterinary business with 438 practices, showed strong top-line growth. Group revenue climbed 7.2pc to £834.2m in the year to March 24, while pre-tax-profit was 5.8pc higher at £95.4m.
However, splitting the retail side of the business from the services operations reveals a dramatic difference in performance.
Sales growth in the retail business - which sells items such as collars, animal food and toys - was 2.9pc higher at £716.7m.
Pets at Home 1-year share price
By comparison, the services side, which includes joint-venture vets practices and dog grooming, streaked ahead, up 44.5pc at £117.5m.
Ian Kellett, chief executive, called the performance “solid”, with the business hitting expectations and "reflecting the strength of our joint venture vet practices where our total income grew 24.6pc”.
Pets at Home is a major player in the UK pet market, which is worth almost £7bn a year and has grown at a compound annual growth rate of 4.5pc for the past two years.
To reflect this, Mr Kellet said the company was investing in expanding its offering with plans to open a further 10 superstores, between 40 and 50 vets practices and the same amount of grooming salons.
It is also facing the challenge of increasing online sales, which are estimated to account for about 11pc of sales.
During the year the company said it was simplifying its retail range and engaging in more competitive pricing and providing more value, such as through promotions and offers, which are likely to have hit profits in the retail division.
However, Mr Kellet said he was “encouraged by customer reaction” to the changes, with sales in the merchandise unit up 1pc since the programme began, adding he was “confident this is the right path for success and we will move swiftly to deliver even better value”.
Shore Capital analysts called the services division of “the growth engine of the business” but praised the improved performance of the retail business, with consumers increasingly under pressure from rising costs and stagnant wages.
