Pets At Home Reports Rise In Profits Despite Slow Retail Outlook

The FTSE 250 pet retailer and veterinary group, Pets at Home, has reported a 14.1 per cent increase in pre-tax profits for the financial year, driven predominantly by the strength of its veterinary division. Despite this growth, the company’s retail arm continues to face challenges, with subdued consumer demand for pet toys and accessories expected to persist this year.

Lyssa McGowan, the chief executive, acknowledged that while there are some signs of recovery in the pet care market, economic pressures on discretionary spending are likely to continue weighing on the retail sector. Revenue from the company’s core retail division declined 1.8 per cent year on year to £1.3 billion. However, this was offset by a robust 13 per cent rise in revenue for its veterinary services division, bringing total group revenue to £1.48 billion, a marginal increase of 0.1 per cent.

Pre-tax profits rose significantly from £105.7 million last year to £120.6 million. Pets at Home has maintained its earnings guidance for the coming year, forecasting profits between £115 million and £125 million, albeit with caution amid rising costs and the relatively slow growth of the pet care market at about 2 per cent.

Investor confidence has been bolstered by the announcement of a £25 million share buyback programme and a 1.6 per cent increase in total dividends. Shares in the company rose 1.6 per cent to close at 266.5p. The veterinary division, described by McGowan as “the jewel in the crown,” continues to deliver strong results. The division has seen double-digit growth across patient visits, average customer spend, and clinical capacity.

The company is investing in advanced capabilities, including CT scans and cardiology services, to improve in-house treatment options and reduce costs for customers. Yet, regulatory scrutiny poses a challenge, with the Competition and Markets Authority (CMA) currently investigating the veterinary sector regarding pricing transparency and market concentration. McGowan stated that the company has engaged constructively with the CMA, supporting many of its proposals while highlighting concerns over potentially demanding remedies.

Pets at Home has made significant strides in transforming its business into a comprehensive pet care platform, integrating retail, grooming, and veterinary services. Analysts remain optimistic about the company’s long-term prospects, citing the resilience and profitability of its capital-light veterinary business model. While the retail sector may face ongoing margin pressures, Pets at Home’s strong position in the UK pet care market continues to reinforce its overall stability.