Pets at Home upgrades FY profit expectations

Pets at Home upgraded its full-year profit expectations on Thursday as it hailed "strong" sales momentum in the first quarter.

In the 16 weeks to 15 July, total revenue grew 25.7% to £377.8m, with group like-for-like revenue up 30.2%, or 29.4% on a two-year basis. Pets said this reflects broad-based growth throughout the quarter and continued strong growth across both retail and veterinary operations.

Retail revenue was up 29.1%, with LFL revenue also 29.1% higher. Pets pointed to good growth across both food and accessories, instore and online, despite the re-opening of non-essential retail and hospitality sectors during the quarter.

Omnichannel revenue grew 21.4%, or 107.5% on a two -year basis, while Vet Group LFL revenues were 44.7% higher, with two-year LFL revenue growth of 25.9%.

Based on trading in the year to date, the company now anticipates that full-year group underlying pre-tax profit will be £130m, coming at the top end of the current range of analyst expectations of between £123m and £130m, and up 49% on the year.

"The UK pet care market is robust, with the ongoing increase in pet ownership, combined with the prevailing trends of pet renewal, humanisation and premiumisation, creating a long-term tailwind for growth across both the underlying market and our business," it said.

Liberum, which rates the shares at ‘buy’, said: "This is another very encouraging update, continuing the upgrade cycle from PETS, which we expect to continue driven by the success of the strategic initiatives put in place well before Covid-19 that has enabled a very strong recovery, with PETS emerging as an overall beneficiary and well set to weather the remaining uncertainty ahead.

"We continue to see upside risk to forecasts as multiple self-help levers look set to drive further outperformance versus the UK pet care market’s accelerating growth. The re-calibration of the Vet Group is now complete with impacts fully annualised meaning greater leverage benefits, higher visibility on profit trajectory and enhanced cash flows to support an already very strong balance sheet."