Pets at Home rallies on solid update, considering Brexit stockpiling

Shares in Pets at Home rallied on Tuesday as it hailed a solid performance over the Christmas period and reiterated its full-year guidance.

In an update for the 12 weeks to 3 January 2019, the pet care business said group revenue grew 6.3% to £237.2m, with retail revenue up 5.5% to 213.4m, including omnichannel revenue up 41.5% to £19m.

Vet Group revenue increased 13.6% to £23.8m, including joint venture fee income growth of 2.5% to £12.4m.

On a like-for-like basis, group revenue rose 5.1% during the quarter, with retail LFL revenue growth of 4.7% and Vet Group LFL revenue growth of 9.1%.

The company reiterated its guidance for FY19 underlying pre-tax profit of £80m to £85m and underlying free cash flow of at least £55m.

Pets said the UK pet care market remains resilient and the strength of its proposition means it continues to take share in the retail (in-store and online) and vet markets. Meanwhile, customer KPIs have continued to improve and the majority of the company's price investment is complete.

It also said on Tuesday that it was considering stockpiling up to £8m of products as it monitors the Brexit process.

Chief executive Peter Pritchard said: "Momentum in retail accelerated over the festive period, culminating in the biggest trading day of our entire history on the Saturday before Christmas. Our omnichannel business delivered exceptional performance, benefitting from investments made earlier in the year, including a new mobile website.

"We are working closely across the group to maximise our assets and data as a pet care business, delivering initiatives that are resulting in an even better experience for customers. With the executive team appointments now complete, I know that we enter 2019 with growing momentum and we are well placed to deliver on our plans and commitments."

At 1135 GMT, the shares were up 8% to 135.58p.

Sophie Lund-Yates, equity analyst Hargreaves Lansdown, said: "The woes of retail are being talked about every day it would seem, but Pets at Home’s managing to keep the downturn at bay. Steady like-for-likes mean the group should give itself a pat on the back, but some of the sales momentum is coming from price cuts, which isn’t a good move for long-term health.

"We admire Pets at Home’s efforts to get punters through the door though. Its vet and grooming clinics are paying off, despite a less-than-perfect launch period. By making stores a one stop shop for pet owners, the group’s better positioned than shops with less enticing propositions.

"All in all, Pets at Home has woken up to the fact the retail environment has changed, and has adapted to fit that. The group has forged itself a sturdy and viable consumer offering, which will come in handy if the retail climate gets much tougher."