Pets at Home set for profit boost but supply chain costs increase

Pets at Home continued to enjoy strong growth from the animal ownership boom during the pandemic, revealing that profits are likely to be ahead of expectations.

Bosses said sales hit £319.4 million in the 12 weeks to December 30, a jump of 5.8% on the same period a year ago.

Its retail business enjoyed particularly strong growth during the run-up to Christmas, up 9.8% as customers turned to more premium brands to pamper their pets.

The company’s vet business saw sales up four percent.

But the company warned that inflation pressures hitting the economy are starting to take hold, with supply chain costs increasing.

Pets at Home said: “We, like many others, are witnessing a number of inflationary pressures across the supply chain. While we are not immune to these challenges, we are proactively mitigating them through a series of planned initiatives.”

The retailer said these include targeting rent reductions, procurement savings and “operational efficiencies”.

Despite the cost pressures, bosses are confident that underlying pre-tax profits will beat expectations, coming in at at least £140 million.

There was strong growth in Pets at Home’s VIP loyalty scheme, up 13% year on year to seven million members, with more than one in four shopping across stores and online.

Its puppy and kitten club membership levels jumped 60%, with 24,000 new members registering every week, and bosses pointing out that members typically spend a third more than non-members across the group.

Less growth was seen at the company’s First Opinion vet practices, however, with new client registrations at 9,200 a week compared with 9,000 in the same period a year ago.

Chief executive Peter Pritchard said: “The trend of new pet ownership has continued at the same pace we saw through the pandemic and I don’t see that dropping off.

“Trends regarding people working from home more are continuing and we have previously seen more money spent on the family when the cost of living is tough so don’t expect to see an impact there.”

Mr Pritchard said the company has seen a strong growth in its membership services and loyalty schemes, describing these as “key” to the firm’s long-term strategy.

He added: “Our unique, omnichannel pet care strategy continues to deliver strong revenue growth, reflecting continued momentum in customer acquisition, engagement and spend as the benefits of our ongoing investment in capacity and capability really start to deliver.”

The boss announced his retirement from the business in November last year; however, there was no update from the company on who will succeed him when he stands down in the summer.

Pets at Home said: “The search for his successor is well advanced and a further announcement will be made in due course.”

Shares in the company were 4.3% higher after early trading.