Pets at Home profits fall as retailer faces tough retail climate

Pets at Home has signalled the need for urgent remedial action following a sharp decline in profits, highlighting significant challenges in its core retail operations. The group, which has yet to appoint a permanent chief executive after Lyssa McGowan’s departure in September, posted a 33.5 percent fall in underlying profit before tax to £36.2 million for the 28 weeks ending 9 October.

Retail operations saw profits contract by 84 percent to £3.5 million over the same period, with revenues falling 2.3 percent to £679.9 million. Ian Burke, serving as interim executive chair, stated the business must recommit to its retailing heritage in order to restore stability and meet investor expectations. The firm has announced a £20 million cost saving programme to address these issues.

Pets at Home identified overexposure to traditional brands in the advanced nutrition segment, as consumers shift rapidly towards new premium offerings sold directly by rivals, as a key cause of the decline. Accessory sales have also dropped over the past three years, with a 5.9 percent reduction recorded most recently. Management acknowledged some competitive and macroeconomic headwinds, but admitted internal failings such as not offering the right products at competitive prices or executing consistently.

While the retail side struggles, the company’s veterinary services division, Vets for Pets, delivered robust results. Revenues there rose by 6.7 percent to £376 million and profits increased by 8.3 percent to £45 million. Pets at Home expects Vets for Pets to generate over £80 million of full year profit. Burke emphasised the necessity of addressing retail shortcomings while maintaining momentum within veterinary operations.

The company experienced significant growth during the pandemic, achieving record sales in 2021 as consumers increased spending on pets and related accessories. Share prices have since returned to levels seen before the pandemic peak.

Pets at Home forecasts a full year underlying profit before tax between £90 million and £100 million. Meanwhile, the veterinary sector overall faces heightened scrutiny after the UK competition watchdog criticised rising costs and proposed measures to cap prescription fees, following sharp price increases over recent years. Vets for Pets has actively advocated for updated regulatory frameworks to address this evolving landscape.