Pets at Home shares rocket after forecast-beating results

Pets at Home has seen shares race higher after posting better-than-expected annual results, despite a bottom line hit from its Vet practice restructuring.

Shares in the group surged 11% higher after annual underlying profits beat market forecasts, up 6.1% to £89.7 million for the year to March 28.

The 452-strong chain said retail like-for-like sales rose 5.1% in the year, with group-wide comparable store sales up 5.7%.

Fourth quarter retail comparable store sales lifted 6.5%, helping it notch up its ninth quarter in a row of like-for-like growth.

But the group’s statutory pre-tax profits slumped 37.7% to £49.6 million after it took a £40.1 million hit on its overhaul of the group’s chain of veterinary practices after rapid expansion in recent years.

It bought out 48 of its 55 joint venture vet practices from the 471-strong Vet Group chain, of which 19 have closed.

Chief executive Peter Pritchard said the group is expecting to close around 35 of these stores in total and warned the overhaul, together with changes to the fee arrangements in some of the joint venture sites, are set to leave underlying profits lower in the new financial year.

But he confirmed the chain remains on track to return to profit growth in 2020-21.

He said: “I’m pleased with our progress and the results we have delivered, but there remains plenty to do.

“I’m confident we will successfully reposition our Vet Group so that, with the strong performance in retail, we will be well-placed to deliver our strategy.”

The group is planning to open up to another five new outlets in its new “stores of the future” format, as well as grooming salons and vet practices over the year ahead.

It also plans to roll out the format to up to another 15 stores being refurbished over the year following the recent opening of its new stores in Stockport and Chesterfield.

Simon Bowler, an analyst at Numis Securities, said: “These results offer further evidence that management action to stabilise retail has proven successful.

“From a base of sharper pricing and better invested and presented offer, we expect the business to achieve sustainable revenue and profit growth.”