Pets at Home’s vet and grooming services pay off as profits jump 40%

• Pets at Home pre-tax profits rise 40% to £87m
• Like-for-like revenues up 4.2%
• Revenues from services including vet practices and grooming grow 25.2%
• Management restructure, as finance chief moves to head up retail unit

Pets at Home has reported a 40% rise in its full-year pre-tax profit to £87m, up from £52.2m in 2014. Underlying EBITDA increased 9.6% to £121.3m in the year to March 26. Total pre-tax profits soared 286%, but this was due to a significant exceptional charge in its last fiscal year.

The retailer also reported like-for-like revenue growth of 4.2%, which it put down to its advanced nutrition, health and hygiene products, as well as its services, VIP Club and omnichannel offering.

Total revenue increased by 9.6% to £729.1m. Merchandise revenues rose 8.3% and service revenues grew 25.2%. Services include vet practices and grooming rooms, which the retailer has continued to invest in over the year.

Pets at Home opened 25 new stores during the year, bringing its total to 400, and its percentage of stores with an on-site vet practice increased from 42% in 2014 to 53% in 2015. Stores with a grooming service increased from 34% to 44%.

Over the next financial year Pets at Home plans to roll out 20 to 25 stores, 5 dog-only Barkers stores, 50 to 55 vet practices and 55 to 60 Groom Rooms.

Chief executive officer Nick Wood, said: “We have seen excellent progress in Advanced Nutrition, a product area that benefits significantly from the specialist knowledge of our highly-trained colleagues and where we have a strong market presence through our private brand, Wainwright’s. We have also seen excellent growth in pet services as we roll-out new vet practices and groom rooms and the existing estate continues to mature. I am particularly proud of our colleagues whose passion for pets mirrors that of our customers and helps to keep our focus firmly on customer engagement.”

Loyalty club and online

Its VIP Club membership increased from 2 million in 2014 to 3.2 million this year, and its advanced nutrition flagship label Wainwright’s grew 44.1% to £40.1m.

The Pets at Home online-only product range increased almost four-fold over the year to 11,500 SKUs, more than 4,400 than available in store. The retailer said click-and-collect and delivery to store have both contributed to omnichannel sales representing 40% of online sales in its fourth quarter.

Divisional management

The retailer has also revealed its intention to implement a divisional management structure across the business.

“With our business growing strongly, we have decided that now is the right time to implement a new divisional structure to drive performance further,” added Wood.

Finance chief Ian Kellett has been appointed chief executive officer of the newly formed retail division, while Sally Hopson – previously customer and people director and chief executive officer of the vet group – has been appointed chief executive of the new services division.

Pets at Home said its search for a new chief financial officer will begin immediately, and until them Kellett will remain in the role while transitioning into the role of retail boss.