Pets at Home vows to keep prices competitive despite inflation woes: reaction

Retail chain Pets at Home has vowed to keep prices competitive despite inflationary pressures as it revealed a record annual profits haul.

The group posted a 65.3 per cent surge in underlying pre-tax profits to £144.7 million for the year to the end of March, on like-for-like sales up 15.8 per cent, as pet ownership continued to boom during the pandemic.

Reported pre-tax profits on a 53-week basis rose to £148.7m, up from £106.3m the previous year.

The group said it is “not immune to current industry-wide inflationary pressures, in particular the impact of raw material, energy and freight costs”. But it added: “We have clear plans in place to keep our pricing competitive for customers, while doing everything we can to reduce our own costs.”

The firm has already taken measures to help reduce its soaring costs, including targeting rent reductions, procurement savings and operational efficiencies. It said these actions should help keep it on track to meet City expectations for underlying pre-tax profits of £151m for the current financial year despite the inflation pressures.

The group noted that it sources more than 80 per cent of its goods from its home market, which is helping to limit freight and shipping costs.

Outgoing chief executive Peter Pritchard, who will hand over the reins to Lyssa McGowan at the end of May after 11 years in charge, said: “Despite another period characterised by significant and evolving external challenges, our performance this year has been noteworthy, delivering record sales, profit, and cash flow.

“I hand over leadership of this great business to Lyssa McGowan with the utmost confidence that Pets at Home will continue to create value for all stakeholders in both the near and longer-term.”

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

Matt Britzman, equity analyst at investment firm Hargreaves Lansdown, said: “Inflationary pressures are lingering in the background, but Pets at Home looks relatively resilient in face of those challenges with a large portion of goods sourced locally and cost initiatives in place easing the pressures.

“Lyssa McGowan steps into the CEO hot seat at the end of May and it looks to be a good time to take the reins.”