Pets at Home says slowdown in stockpiling demand will hit first-half profits

Pets at Home has warned that profits will be materially lower than predicted in the current half-year, after coronavirus stockpiling unwound.

Shares slipped after the retailer said that “nearly all of the exceptional demand” from the closing weeks of March has dried up in the current quarter.

Group turnover has been “temporarily depressed” by social distancing across stores and restrictions on the sale of pet products and healthcare services deemed non-essential, it said.

Pets at Home said online sales have remained materially higher throughout the pandemic, but have been unable to offset lower store sales and £5 million of costs related to initially responding to the outbreak.

The update came as the group said annual revenues surpassed the £1 billion mark for the first time in the year to March, rising by 10.2% to £1.05 billion.

Meanwhile, underlying pre-tax profits for the year grew by 11% to £99.5 million.

Peter Pritchard, group chief executive officer, said the company remains “confident” of the long-term sustainability of its model despite highlighting that it is difficult to predict the impact of the virus on customer behaviour.

He said: “Over and above managing the business through the pandemic, we must endeavour to continue creating value for our shareholders by being well-placed for a recovery in demand.

“Early indications are that some of the behaviours that consumers have displayed during lockdown, notably social distancing and the preference to purchase goods and services safely and conveniently, may persist post exit.

“These are clearly unprecedented times and Pets at Home will not be immune to the challenges that we collectively face.

“We have had to respond quickly and make significant changes to the way we operate our business, and will undoubtedly need to remain focused yet agile as we respond to pandemic-driven issues and opportunities alike.”

Shares in the company dropped by 10.1% to 206.4p in early trading.

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