Pets at Home shrugs off difficult economic backdrop to report record revenues

Pets at Home Group defied increasing economic uncertainty and harsh lockdown comparisons to achieve record sales in the past fiscal year.

The Cheshire-based retailer’s turnover grew 6.6 per cent to £1.4 billion for the 12 months ended March, thanks to better food sales and stronger performance from its veterinary services division.

Pet ownership in the UK boomed in the wake of the pandemic, as Britons rushed to buy pets during the lockdown periods.

Demand for pet services has remained robust, although restrictions related to the coronavirus have subsequently been lifted and people are spending more time in the office and travelling.

Many consumers also prioritize spending on their pets and cut back on other goods and services, including their weekly grocery store, against a backdrop of high inflation.

Membership of the company’s VIP loyalty club rose to 7.7 million last year, while new subscribers to the Puppy & Kitten Club averaged more than 24,000 per week.

This helped boost the company’s underlying pre-tax profit by 4.8 per cent to £136.4m, despite rising energy bills and investments in the digital platform driving up operating costs.

However, statutory profit before tax fell 17.7 per cent to £122.5 million due to the lack of any benefit from the sale of the specialist veterinary business to rival Linnaeus Group and the cost of completing the new distribution centre.

Lyssa McGowan, CEO of Pets at Home, said: ‘Our record performance over the past year demonstrates that our attractive pet care offerings continue to resonate strongly with consumers.

“Through our unique mix of products, services and expert advice, we were able to better serve pet owners, expand our customer base and gain more market share, building on our leading position in the UK pet care market.”

McGowan joined the company from Sky UK last year following the departure of Paul Pritchard, whose tenure coincided with the company’s rise as a retail giant.

Amid fierce competition from rivals like Amazon, Pritchard began lowering prices and strengthening the group’s focus on more profitable services, such as dog grooming and veterinary care.

Before leaving Pets at Home, he predicted to the Mail on Sunday that few Britons would give up their pets due to cost-of-living issues, cutting back on eating out and buying a new vehicle instead.

His successor has now unveiled plans to develop a unified pet care app where customers can book a range of services, such as surgical appointments and repeat prescriptions.

McGowan also aims to grow 7 percent in sales and 10 percent in pre-tax profit over the medium term.

To try to attract greater market share and maintain profitability, the company said it has kept prices as “affordable as possible.”

Sophie Lund-Yates, chief equity analyst at Hargreaves Lansdown, said: ‘The joy of running a business in this space is that a certain level of demand is guaranteed regardless of the economic climate, our dogs and cats still need food, and this is one of the last areas people cut back on when the going gets tough.”

But she cautioned, “Consumers are tightening their belts, which means they’re more interested in buying the basics than more lucrative accessories.”

“As Pets at Home continues to invest to keep prices down, margins are taking a hit. Spending money to protect existing market share rather than growing it is never ideal, and it’s possible that the group could almost hit the side of the tank.”

Shares Pets at Home Group were 2.3 percent lower at 358.6 p on Thursday morning.