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PETS At Home(PETS) Fundamentals

One of Shares 15 for 2015.

Despite the above have bought a few today. :0)

Shares - James Crux

Pet foods-to-accessories seller Pets At Home (PETS) could pep up portfolios in 2015 as growth on numerous fronts is expected. Increasing demand for exposure to the differentiated retailer’s resilient earnings streams and enviable cash generation should help the share price bound higher, while debt reduction could also improve sentiment towards the stock.

Despite a series of positive trading updates, Pets At Home’s shares are still languishing 18% below March’s 245p IPO price, potentially with worries over the cost of servicing debt in the event of a hike in interest rates still weighing on sentiment. Yet Shares believes a combination of burgeoning brand awareness – boosted by a return to TV advertising – as well as continued strong sales momentum and falling leverage levels will encourage investors to reappraise the company’s merits.



The pet shops play is a cash-generative market leader with 385 UK stores and compelling multi-channel expansion prospects in a resilient pet care market. Growth drivers include Pets’ new space rollout against a backcloth of a rising proportion of single-person households and couples without children, who are prepared to splash out on premium treats and advanced nutrition for cats, dogs and other small pets. Like-for-like sales momentum is positive, assisted by VIP club membership growth which engenders loyalty, boosts basket sizes and is helping Pets At Home to grab market share.

The fully-listed retailer has also grown into the biggest player in a fragmented UK small animal veterinary market and sports lucrative potential in pet grooming services. As surgeries and ‘Groom Rooms’ mature, and sales of higher margin advanced nutrition products, including own brand cat and dog food product Wainwright’s grow, there is scope for significant margin improvements which will coax analysts’ estimates higher.



Interims (4 Dec) highlighted further margin expansion and like-for-like sales growth of 4.2%, driven by strength across advanced nutrition and health and hygiene products, as well as vet practices, Groom Rooms and the web. Moreover, the business generated underlying free cash flow of £33.8 million, supporting the announcement of a first dividend payment of 1.8p per share. Supported by Pets At Home’s strong cash flow, financial risk is set to fall further in the second half of the year to March 2015, a potential catalyst for share price gains. Half-year net debt of £232.8 million represented a leverage ratio of two times underlying earnings before interest, taxation, depreciation and amortisation (EBITDA), materially reduced from 2.3 times at the previous year-end. (JC)

Share price: 201.3p

Market cap: £1 billion

EPS Mar 2015: 13.2p

EPS Mar 2016: 14.8p

PE Mar 2015: 15.3

PE Mar 2016: 13.6

Dividend Mar 2015: 5.0p

Dividend Mar 2016: 5.6p

Prospective dividend yield Mar 2015: 2.5%

Trading Statement

Pets At Home Group Plc: Q3 FY15 Trading Statement

Another robust quarter, in line to meet expectations for FY15

Q3 FY15 financial summary

· Like-for-like revenue growth of 4.1% driven by strength in Advanced Nutrition, Health & Hygiene, Christmas range, VIP Club, Services and Omni-channel

o Merchandise like-for-like revenue growth of 3.4%
o Services like-for-like revenue growth of 15.6%

· Total revenue growth of 7.8% to £182.2m

o Merchandise revenues up 6.5% to £168.2m, with Food continuing to grow slightly ahead of Accessories
o Services revenues up 26.0% to £14.0m

· Fee income from Joint Venture veterinary practices up 32.9% to £6.4m

· Gross margin improvement in line with guidance for FY15

· The Group continues to trade in line with expectations for the full financial year

Operational summary

During the third quarter, we opened 7 new stores, bringing gross openings in FY15 to 17 and a total portfolio of 392 stores. We have further expanded our Services footprint, opening 5 veterinary practices and 8 Groom Rooms in the quarter, bringing the total portfolios to 308 and 160 respectively. Of the 31 vet practice and 31 Groom Room openings in FY15, 17 and 14 have been retrofits to existing stores. We continue to expect gross openings of at least 25 stores, 60 veterinary practices and 50 Groom Room salons in FY15.

Our VIP club loyalty scheme continued to perform strongly and gained over 250,000 new members during the quarter to reach a total of 2.9 million. VIP card swipe rate at store tills represented 61% of revenues, compared with 57% in the first half of FY15.

Within omni-channel, we have expanded our online-only product range by nearly 800 SKUs in the quarter, bringing the total extended range to over 11,600 SKUs, an uplift of more than 4000 to those available in stores. Deliver To Store, which launched in August and allows customers to pick up the extended range in store, is growing strongly and has become a key contributor to omnichannel revenues.

We also launched additional TV advertising during the period, sponsoring 'For The Love Of Dogs', one of ITV's highest rating programmes. The Christmas special alone was watched by 5.2 million viewers.

more...

Naked Trader today- I've added some more Pets at Home (LON:PETS) after its decent statement yesterday. Already in a great profit from the ones I bought in the 170s.

New stores are opening but I especially liked the revenue increase of 26% from its joint vet practices.

Most traders shun this kind of share as they perceive it as boring but I don't see why this one shouldn't have a good year with current increases it looks worth more, and no reason why it shouldn't head back up to its float price of 250ish. It's also a nice sleep at night one.

Cheers for that DC - interesting. I will check out the NT website, haven't looked at it for ages.

Woof, woof,. lol

NT has a target of 250p.

Trying to break out from their kennels today.

Starting to look promising!

Naked Trader today -Probably star of the show surprisingly is Pets at Home! Up nearly 15% recently. Those of you who came to the seminar saw the real giant spreadbets I have in it where I am up more than £10,000.

It's reached my target but actually it looks so strong I'm staying put for now, perhaps 250 is now achievable.

241.70p - the highest since just after the float.

Liberum Capital Buy 240.90 237.60 - 275.00 Initiates/Starts

Berenberg Buy 236.60 236.40 - 290.00 Initiates/Starts

New high @255p.

A new high @255.80p.

Naked Trader-Pets at Home (LON:PETS) is still doing well and I was looking for 250 - now it is up above 260 getting even greedier and wondering about 275! Those of you who came to the seminar saw the real giant spreadbets I have in it where I am up more than £15,000.

Announcement of refinancing


Pets at Home Group Plc, the UK's leading specialist retailer of pet food, accessories, pet-related products and services, today announces the closing of a new financing agreement for a five year, £260m revolving credit facility. At current leverage, the facility carries a rate of LIBOR +1.5%.

The facility replaces the Group's existing £325m of drawn facilities, which at current leverage, carried a rate of LIBOR +1.9%.

The new facility is expected to reduce Group net financing expense on the income statement by approximately £2.7m per annum at current leverage. It is expected that the differential balance between the two facilities will be settled from the Group's existing cash resources. Capitalised fees associated with the previous facility will be reflected as an exceptional charge to the income statement of approximately £4.3m in FY16.

The banking syndicate for the new facility comprises 10 lenders.

Pets at Home will release its FY15 year end trading statement on 21st April 2015.

Trading Statement

Delivering on expectations for the financial year 2015

Pets at Home Group Plc, the UK's leading specialist retailer of pet food, accessories and services, today announces a FY15 trading update for the 52 week period to 26th March 2015.

FY15 financial summary

· Like-for-like revenue growth of 4.2% driven by strength in Advanced Nutrition, Health & Hygiene, VIP Club, Services and Omni-channel
o Merchandise like-for-like revenue growth of 3.7%
o Services like-for-like revenue growth of 10.7%

· Total revenue growth of 9.6% to £729.1m
o Merchandise revenues up 8.3% to £666.1m, with Food outperforming Accessories
o Services revenues up 25.2% to £63.0m

· Fee income from Joint Venture veterinary practices up 30.7% to £28.2m

· Underlying EBITDA for FY15 expected to be in line with market consensus*

Operational summary

· Rollout during FY15
o 25 gross store openings, bringing the total portfolio to 400
o 61 vet practice openings, of which 32 were retrofits, bringing the total portfolio to 338
o 50 Groom Room openings, of which 26 were retrofits, bringing the total portfolio to 179

· VIP club
o Total members at year end of 3.2m, adding over 270,000 in the Q4 period
o Card swipe rate at store tills represented 65% of revenues in the Q4, compared with 61% during the Q3

Since the year end, we have made our entry into specialist referral veterinary care, acquiring Northwest Surgeons based in Cheshire. Northwest Surgeons will operate as a stand-alone brand and business within our practice network.

Nick Wood, Chief Executive Officer, commented:
"We are delighted to be delivering on expectations in our first year as a publicly listed company. We have seen strength across both merchandise and services, demonstrating the broad range of levers through which we will successfully deliver further profitable business growth."