The tail is wagging happily at Pets at Home Group PLC (LON:PETS) with retail sales reaching £1 billion for the first time.
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Pets At Home Benefits From The Pandemic
The company has clawed opportunity from the soaring popularity for pets during the pandemic, with ownership estimated to be up 8% over the year. Lockdowns proved an ideal opportunity for people to settle in a new member of the household. It’s the demand for array of goods and services to keep them fed, watered and entertained which have returned a big stick of revenue to the group.
Like for like sales grew 8.7% across the group, and if compared to 2019, revenues were up 17%. Underlying pre-tax profits came in at £87.5 million ahead of previous guidance. Although this is a fall of 6.4% year on year, it reflects the Covid impact of round £30 million and the repayment of business rates relief. Adjusted underlying pre-tax profits for the second half grew 22%.
The cream being lapped up by Pets is the growth in recurring revenue streams, with a 34% growth in subscription sales.
Rise In Memberships
The VIP and Puppy and Kitten Club memberships, rose 60.9% with sign-ups for the service in the second half double of the year before. Members are big spenders, typically splashing out a third more per year than regular customers. Its loyalty VIP club also grew by 9% to 6.2 million.
Investment in the group’s online channels has paid off, particularly for its growing veterinary service business, with the home delivery of medicines growing 35% over the year. The company isn’t sitting back on its haunches in terms of its digital offering. It’s ploughing £20 million into Polestar, to create a single digital dashboard of its services, from grooming to shopping via one universal login.
There is a risk that the jaws of the pet boom, could clamp shut as more people return to the world of work once more and put off the purchase of a furry friend. But Pets At Home is geared up to supply new pandemic owners with a lifetime of goods and services and has a growing set of data of customers it’s able to draw on to expand its business.
It expects underlying pre-tax profit for year to the end of March 2022 to be in the range of £120 million to £130 million.’’
Article by Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown
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