FTSE 250: Pets at Home revenue grows as pandemic pet boom continues to boost profits

·Finance Reporter, Yahoo Finance UK
·2 min read
Pets at Home he launch party and private view of The Company of Dogs, an exhibition at The Gallery in Shoreditch, London, featuring pictures by Gerrard Gethings of celebrities' dogs and twenty Dogs Trust dogs looking for a home.
Pets at Home saw sustained demand across its businesses both online and offline. Photo: PA

Pets At Home (PETS.L) posted a 7.1% rise in first-quarter revenue as it continues to profit from the pandemic pet boom.

The FTSE 250 (^FTMC) company acquired 1.1 million new customers last year as the lockdown-driven boom in pet ownership created new opportunities for animal retailers.

Sign-ups to its puppy and kitten club — a subscription service for pet owners — averaged 25,000 a week, three times higher than before COVID, the retailer said.

Total revenue grew 7.1% to £404.7m ($491m) in the 16 weeks to 21 July, while revenue for its vet arm increased by 11%. Like-for-like sales rose 6%.

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Pets At Home ended the quarter with £40.2m in net cash and said its full-year profit outlook of £131m remained unchanged.

Lyssa McGowan, Pets At Home chief executive, said: “Our performance has remained strong in the first quarter, underpinned by continued customer growth and high levels of retention.”

Steep cost inflation has impacted the business in recent months with rising prices of raw materials and huge surges in energy costs.

But it plans to manage cost pressures by reducing costs and improving operational efficiencies and therefore avoiding price rises for customers, bosses said.

AJ Bell investment director Russ Mould said: “Items like pet food purchased for furry friends don’t seem to be experiencing a slide in demand impacted by higher prices, perhaps because that outlay typically represents a modest portion of overall household spending,” said AJ Bell’s Russ Mould.

“The pandemic also saw the UK’s pet population increase as people welcomed lockdown puppies, kittens and other cute critters to their home.

“While some may have subsequently lost interest in their new additions, the emotional attachment involved means the majority of pet owners will still keep catering to the needs of their furry friends."

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Matt Britzman, equity analyst at Hargreaves Lansdown, said: “The pandemic fuelled pet ownership craze was a blessing for Pets At Home and those cats and dogs will need looking after long into the future.

“What’s very interesting with Pets At Home is its hybrid approach, omni-channel revenue continues to grow and was the standout this quarter.

“That’s testament to a lot of work that’s gone into boosting the online offering, with services like click and collect meaning customer journeys are a mix of online and in-store.”

Pets At Home was founded by businessman Anthony Preston in 1991.

Watch: Pets At Home store sales top £1bn after pandemic boost in animal ownership