Higher costs hit Pets at Home profits but business remains 'resilient': reaction

Retail chain Pets at Home has reported a fall in interim profits as it came under pressure from higher freight and energy costs.

The group, which also offers veterinary services, said underlying pre-tax profit dropped by 9.3 per cent to £59.2 million over the half-year to October 13, compared with the same period a year earlier. It noted that this was in line with expectations as it held profit targets for the year and hailed a “resilient” pet care market. Lyssa McGowan, who was appointed chief executive earlier this year, said the performance showed “progress” as the business notched up “new records for customer numbers in recent months”.

Pets at Home said new customer numbers are “strong” after it benefited from an acceleration in people registering for its Puppy & Kitten club membership over the half-year. It highlighted that consumer demand has stayed strong as a result of record levels of UK pet ownership, despite pressure on household budgets. The company also told investors that it is actively managing cost headwinds, such as unfavourable foreign exchange rates, energy costs and wage increases.

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Lara Martinez, an analyst at Third Bridge, noted: “The UK saw a massive increase in pet ownership during Covid and our experts expect growth, albeit at a slower pace, to continue over the next two to five years as a structural shift in working patterns takes hold. Pets owners will strongly resist trading down their pet food and pet care purchases during an economic downturn. The Puppy & Kitten Club remains a key source of revenue for Pets at Home. There are tremendous opportunities to increase cross-selling from retail to veterinary divisions.”

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McGowan told investors: “In my first six months as CEO, I have spent my time forming a deep understanding of the business and sector, learning from the ground up how the business operates. I am more convinced that Pets at Home is well-positioned to capitalise on an attractive growth opportunity in our structurally-growing pet care market, supported by our unique blend of products and services, deeply-embedded culture and expert, passionate colleagues and partners. Our first-half performance shows progress and resilience across the business.”

The Pets at Home chain was boosted by a surge in demand for pets among Britons during the coronavirus crisis while its essential status allowed its stores to remain open throughout lockdowns.

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