Pets at Home boss Lyssa McGowan told Retail Week that the business would have to consider “every lever” as it looks to mitigate new costs imposed on retail by the Budget.
The petcare retailer reported today that it was anticipating extra costs of up to £18m in the next financial year following changes to the minimum wage and national insurance.
McGowan said the projected cost of the Budget was “about double” what was expected, on top of an £18m hit in last year’s figures from “a much more significant increase than anyone was expecting” in the national living wage it had already absorbed.
“We have got operating costs flat this year in the first half, so we are doing a good job using productivity, efficiency, automation, AI and cost reduction programmes to make sure that we’re as efficient as possible, and have to pass on as little of that as possible.”
McGowan told Retail Week that although there were no current plans that would impact jobs at the retailer, it may be something it would have to consider in the future.
“We don’t have any plans for job cuts on the back of the Budget but, like all retailers, we’re going to have to look at all the possible angles. We’ll have to look at how much [of the cost] we can mitigate and that may include other levers.”
Pets at Home reported a rise in interim sales and earnings but said an “unusually subdued pet retail market” was expected to continue in the second half. However, it expected conditions to improve in the longer term.
Pets at Home posted a 47.3% increase in statutory pre-tax profits in the six months to October 10, “mainly driven by a significant reduction in non-underlying costs”. Underlying profits of £54.5m were ahead by 14.1%.
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