Pets at Home third-quarter revenue rises, final guidance unchanged

In the 12-week period to 4 January 2018, group revenue grew 9.6% to 223.3m, with group like-for-like revenue up 7.2%.

Merchandise revenue rose 9% to £193.4m, including omnichannel revenue up 77% to £13m, while services revenue grew 13.6% to £29.9m, including joint venture vet practice income up 19.3% to £12.1m.

Merchandise LFL revenue was up 6.8%, while services LFL revenue increased 10.1%.

During the period, the company opened two Pets at Home superstores, two Vets4Pets practices and five Groom Room salons. It's on track to deliver full-year opening targets of around 10 superstores, 40 to 50 vet practices and 20 to 30 grooming salons.

Chief executive officer Ian Kellett said: "I'm happy to report further progress in the third quarter, where trading momentum in our merchandise division built over the Christmas period. In the year since we launched our lower pricing initiatives we have seen a really strong customer response to the investments we have made. At the same time, we continued to deliver strong growth in our veterinary business across both first opinion practices and specialist referral centres. Thanks again to colleagues across the group who worked incredibly hard to deliver this result.

"We again saw the benefits of our omnichannel capabilities, providing customers with innovative and convenient ways to shop, particularly through order in-store and subscription services. This unique combination of capabilities are brought to life by our store colleagues who provide the friendly expertise, advice and service that our customers really value."

Numis, which rates the stock at 'buy', said: "We are impressed by the strong customer reaction to the merchandise pricing initiatives, while the continued strong LFL growth in the first opinion vet practices further demonstrates the long-term opportunity in the services division. We edge our FY18 profit before tax forecasts ahead, from £83.7m to £86.0m and retain our positive stance."

Shore Capital analyst Phil Carrol said: "We continue to like Pets story with an investment case based on a market with structural growth and retail proposition that is continuing to strengthen with improving results post its repositioning. Therefore, we are hopeful that as the business enters FY2019F it can move back into an upgrade cycle. We reiterate our buy recommendation."

At 0900 GMT, the shares were up 7.9% to 196.40p.