Despite news of further weak trading, Pets at Home’s share price spiked on Wednesday as the retailer averted another confidence-crushing profit warning.
At 216.4p per share, the Pets at Home share price was last 4.4% higher in midweek business.
The FTSE 250 company said revenues dipped 1.3% in the 28 weeks to 9 October, to £778.3 million. This pulled pre-tax profit 29.1% lower to £36.2 million.
Including insurance start-up expenses, operating costs rose 1.2% from the same 2024 period.
Retail Woes
The first-half sales decline was prompted by sustained weakness at its retail division, Pets at Home noted. Sales dropped 2.3% year on year, to £679.9 million, while underlying pre-tax profit tanked 84.1% to £3.5 million.
Underlying pre-tax profit margins slumped by 260 basis points, to 0.5%.
The company said that targeting discounting, an adverse product mix and lower supplier income all hammered the bottom line. It said the broader petcare market experienced flat growth over the period.
However, the retailer added that “Q2 performance sequentially improved over Q1 as we saw a full quarter of strong online performance, partially offsetting weaker store sales.”
Vets In Good Health
Pets at Home’s veterinary services unit once again did the heavy lifting in the first half.
Revenues here spiked 6.7% in the first half, to £375.9 million. The company said this was “driven by average transaction values and continued growth in Care Plan revenues.”
Underlying pre-tax profit at the division rose 8.3% year on year, to £44.9 million. Corresponding margins rose 90 basis points, to 45.7%, which the company attributed to “operational gearing from higher joint venture (JV) practice revenues alongside an ongoing improvement in managed practice profitability.”
CEO Speaks
Chairman and interim chief executive Ian Burke said “for over 30 years, Pets at Home has been a business with a clear purpose, an established market and loyal customer base, but it’s clear that urgent and necessary action is needed to return the retail business to growth to meet both our own expectations and those of our investors.”
Burke – who became temporary chief exec in September – added that “we are returning to our retailing roots to stabilise and rebuild momentum in our retail business, and to lay the foundations for a new CEO in due course.”
The FTSE 250 firm is hunting for a new chief executive after the sudden departure of Lyssa McGowan in September. McGowan ended her three-year tenure after Pets at Home released its second profit warning of 2025.
Retail Needs Revival
Analyst Mark Crouch of eToro noted said the retailer’s results “landed with something of a thud this morning.”
He said the real story of the results was “the widening gulf between the ailing retail arm and the steady, tail-wagging resilience of the veterinary division, noting that “while the shop floor has lost its bite, the vets delivered… the kind of dependable growth that’s fast becoming the company’s financial anchor.”
Crouch added that “retail needs urgent revival, not least because the balance sheet has bulked up with a worrying rise in debt. Investors, already weary after several years of poor share-price performance, will want evidence that the slump in consumer demand isn’t becoming structural.”