Pets at Home sales grow as Covid costs drag down profits

In its interim results for the 28 weeks to October 8, Pets at Home reported a decline in group underlying profit before tax of 5.1% to £40m, while like-for-like sales increased 5.1% to £574m. 

The specialist retailer put the profit decline down to “the one-off and ongoing costs of Covid-19”, as well as the forced closure of services like its grooming salons and the sale of animals during the first lockdown in the spring.

As lockdown restrictions were eased heading into the summer, Pets at Home reported a 44% growth in profit and 5.8% growth in like-for-like retail sales for the second quarter of the year. 

The retailer also saw online sales soar 66% in the period, with omnichannel revenues accounting for 15% of total sales in the first half. 

Pets at Home also reported strong growth in customer acquisition and retention, with the number of VIP customers growing 15% year on year to 6 million and subscription customers increasing 22% to over 970,000. 

The retailer said net debt for the period stood at £51m, with total liquidity standing at £297 combined with existing credit of £348m.

The business said that – without any further unforeseen restrictions due to the virus in the second half of the year – underlying full-year pre-tax profit would be in line with expectations. 

Chief executive Peter Pritchard said: “In spite of the ongoing and wide-ranging impact of Covid-19, there is much to be optimistic about.

“The market in which we operate remains resilient, with recent changes to our work and leisure patterns supporting rising levels of pet ownership, a good proxy for future growth in both the underlying market and our business.

“We adapted our operations rapidly post the onset of the pandemic, and our focus on customer acquisition is underpinning market share gains across all channels, and strong growth in our VIP and Puppy and Kitten clubs, thereby increasing the long-term opportunity of using data-driven, joined-up solutions across our range of products and services to drive customer share of wallet and lifetime value.

“We are introducing new ways to meet our customers’ needs across all channels, making pet care as affordable, convenient, engaging and flexible as possible, and our customer-centric pet care platform, underpinned by the most extensive and unique proprietary pet dataset in the UK and a true omnichannel backbone, provides us with significant competitive advantages.

“There is much to be proud of over the last six months and much to look forward to in equal measure. While we will continue to remain focused and agile in our execution, we are, more than ever, confident in the resilience and longevity of our pet care platform.”