Pets at Home: Retailer reveals drop in profits as it cuts prices
Pets at Home has revealed a slump in profits for the past year caused by weaker retail sales and price cuts.
But the new boss of the group said it has made “material progress” in the retail arm’s turnaround plan over the past six months.
The pet products retailer and vet group told shareholders that pre-tax profits slid by 28.3 per cent to £86.5m for the 52 weeks to March 26, compared with a year earlier.
Pets at Home said it saw weaker profit margins in its retail division during the year, partly linked to investment in pricing.
In January, the group said it slashed prices on around 1,000 products in a bid to revive its flagging fortunes.
It has seen sales of pet food and similar products face fierce pricing competition from non-specialist retailers, such as supermarkets.
The company said on Wednesday that revenues slipped by 0.8 per cent to £1.47bn for the past year, compared with a year earlier.
Within its consumer operation, Pets at Home said retail revenues fell by one per cent for the year.
Meanwhile, the group’s vet division saw revenues increase by 5 per cent year-on-year.
Former Waitrose boss James Bailey joined the company earlier this year to help steer its turnaround efforts.
Mr Bailey, chief executive of the firm, said: “Pets at Home is a business with many strengths, a strong shared purpose and great potential, and I am excited to lead it through its next chapter.
“Material progress has been made over the past six months stabilising the retail business, delivering improved satisfaction and better availability.
“We have the opportunity now to build momentum through profitable volume-led growth in retail while continuing to execute the proven growth levers of our vet business and launch our insurance offering.”
Speaking on the results, Russ Mould, investment director at AJ Bell, said: “There wasn’t too much to get the market’s tail wagging in Pets at Home’s latest results. Badly in need of some renewed pep, the company posted a big, albeit not unexpected, drop in profit.
“Pets at Home’s retail business is really suffering from competition from non-specialist rivals like supermarkets, with their greater scale and ability to offer discounts, and also from consumers dialling back their spending on toys and treats for their feathered and furry friends.
“Britons famously love their pets but in tough times, it’s no surprise nice-to-have items are on the back burner.
“The veterinary business proved resilient and the cloud hovering over this division from a probe by the competition authorities has largely dissipated at this point."
Mr Mould said he believed Petsat Home’s new CEO would likely “continue to pull on levers like the customer loyalty scheme”, which Mr Mould said “should help drive repeat business”.