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Pets At Home Group PLC said the pandemic boom in pet ownership is showing no sign of reversing, but higher freight and energy costs took a toll on profit in its recent half-year.
Sign-ups to its Puppy & Kitten Club averaged 29,000 per week in the second quarter, which ended last month, more than triple the pace before the Covid-19 lockdowns.
Pretax profit was £53.4 million in the six months ended October 13, down 19% from £65.7 million a year before, despite revenue climbing by 7.3% to £727.2 million from £677.6 million.
Underlying pretax profit was £59.2 million, down 9.3% from £65.3 million a year prior, due to £4.0 million and £4.9 million hits from higher freight and energy costs, respectively. Pets at Home also made £8.1 million in digital investments.
Looking ahead, Pets at Home said there was no change to its financial 2023 guidance for underlying pretax profit of £131 million, with a range of £121 million to £136 million. This would be flat on £130.1 million in financial 2022, which was a 53-week year.
Pets at Home declared an interim dividend of 4.5 pence per share, up 4.7% from 4.3p a year before.
‘The business, and the wider pet care market, remains resilient and in growth,’ Pets at Home said. ‘New customer acquisition remains strong with registrations into our Puppy & Kitten club accelerating throughout H1 and customer spend maintained across the group. Consumer demand remains strong, with a record number of UK pet owners continuing to prioritise spending on their pets.’
Chief Executive Officer Lyssa McGowan, who has been in post for six months, said: ‘In a challenging macro-environment, the pet care industry remains in growth across all channels, and we have continued to acquire new customers at an impressive rate, setting new records for customer numbers in recent months.’
Commented Lara Martinez, an analyst at research house Third Bridge: ‘The UK saw a massive increase in pet ownership during Covid and our experts expect growth, albeit at a slower pace, to continue over the next 2-5 years as a structural shift in working patterns takes hold.
‘Pets owners will strongly resist trading down their pet food and pet care purchases during an economic downturn.’
Pets at Home shares were down 9.0% at 276.51 pence in London early Wednesday. They are down 43% over the past 12 months.
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