Pets at Home: key half year to cement future business growth

British pet retailer Pets at Home exceeded £1 billion ($1.26B/€1.15B) in revenue in the first half of the 2024 fiscal year (FY) ending 12 October 2023. This is 8.6% more than during the same period last year when it hit £928.2 million ($1.17B/€1.06B).

The growth, which surpassed the company’s forecast of 7%, has been in both offline and online channels during a time when the retailer has made “further progress” in retaining and acquiring new customers.

Pets at Home’s vet business recorded a total consumer revenue of £311.7 million ($393.5M/€359M) in the 6 months to October 2023, nearly 17% more than the same period in 2023.

According to the company, underlying consumer demand “was resilient with structural trends underpinning sustained market growth.”

Highest execution risk

CEO Lyssa McGowan mentioned to investors that H1 has been “a critical period” in laying the foundations of their platform for future growth. “This period has not been without challenges, but we have been able to manage these well,” she adds.

One of the main challenges for the British pet retailer was the transition of its store logistics to the Stafford Distribution Centre, the company’s brand-new national fulfillment center.

Pets at Home said that in Q2, in-store performance was impacted by short-term availability challenges due to the transition to the new center. “The business responded quickly to address the issue, and our availability and sales performance have now normalized,” the company clarified to investors.

Profit before tax (PBT) took a hit, falling to £47.8 million ($60.3M/€55M), down 19.3% from £59.2 million last year ($74.7M/€68.2M). Pets at Home justified the decrease, saying profit was impacted by “continued investment in the platform with higher logistics costs and the brand relaunch.”

Pets at Home foresees extra logistics costs in the second half of FY24 of £14 million ($17.6M/€16.1M). 

Government investigation

Earlier this year, the Competition and Markets Authority (CMA) launched an investigation to address concerns about the rising costs of vet pet care.

Pets at Home, which operates Vet for Pets, said it has offered the CMA its “complete cooperation” with this review. 

The company acknowledged that the UK’s veterinary-related inflation has been above overall UK inflation for some time but defended that the significant cost headwinds UK vets face “must be passed onto consumers to some extent.”

The retailer said they don’t expect any impact on their growth strategy due to the government investigation. According to the figures, the new sign-ups for their vet service remained strong at 18,000 per week nationwide. 

Looking ahead 

Pets at Home expects consumer sales to grow around 7% in the next 6 months.

The business is keeping its full-year underlying profit before tax (PBT) guidance at £136 million ($171.6M/€156.7M).

“We have experienced higher logistics costs and disruption than originally planned, but these have been managed, and the impact on profit expectations contained without compromising our commercial proposition or overstretching our operations,” it says. 

The British retailer assured investors it is on track to launch a new digital platform by the end of FY24.