Pets at Home hails record FY performance

Pets at Home announced a further £50m share buyback on Thursday as it hailed a record full-year performance, posting a jump in underlying pre-tax profit and revenue.

In the year to 30 March, underlying pre-tax profit rose 4.8% to £136.4m, ahead of previous guidance, with a strong trading performance partly offset by higher energy costs and increased investment in digital assets as it builds out its platform.

Meanwhile, revenue was up 6.6% to £1.4bn, with like-for-like revenue 7.9% higher.

On a statutory basis, pre-tax profit fell 17.7% on the previous year to £122.5m, reflecting the gain on the sale of its Specialist Group in FY22 and the costs of bringing the company's new distribution centre onstream in FY23.

Vet Group revenue increased 13.3% during the year to £122.8m, while retail revenue was up 5.9% at £1.3bn. Within retail, food grew at 11.4%, but accessories fell 0.9%.

Pets said it had completed a £50m share buyback programme during the year, and announced a further £50m buyback for the year ahead.

It also announced a new medium-term strategy to build "the world’s best pet care platform".

"This will generate sustainable value for all stakeholders, as we create a better world for pets and the people that love them," it said.

Chief executive Lyssa McGowan said: "Our record performance over the past year demonstrates that our compelling pet care offer continues to resonate strongly with consumers.

"Through our unique blend of products, services and expert advice we were able to serve pet owners better, grow our consumer base, and win more market share, building on our leading position in the UK pet care market."

Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said: "Pets at Home has put in a remarkably strong performance for the full year, beating expectations in the process. The joy of operating a business in this space is that a certain level of demand is guaranteed, no matter what the economic climate, our dogs and cats still need food, and this is one of the last areas people will skimp on when times get tough.

"Pets at Home’s market-leading position hasn’t come by accident and is testament to the strong work that’s been done on product availability and pricing proposition. Free cash flow remains a major benefit, helping to underpin another year of dividends and buybacks.

"However, there are some potential clouds gathering. Consumers are tightening their belts, which means they’re more interested in buying the basics than they are more lucrative accessories. As Pets at Home continues to invest in keeping prices low, it means margins are taking a hit. Spending money to protect existing market share rather than grow it is never ideal, and it’s possible the group’s close to bumping up against the side of the tank. The vet business is an attractive revenue diversifier, but is relatively mature. Stoking further growth is likely going to mean Pets at Home needs to open its own wallet once again."