Sales at Pets at Home increase due to heightened demand for veterinary services
Pets at Home: Veterinary Arm Yields a 23.3% Profit Surge Amid Retail Slump
Pets at Home, a leading pet care platform, has announced a marked increase in underlying pre-tax profits for its veterinary division, up by 23.3% year-on-year to £75.9 million. This impressive growth was driven by a 13% swell in revenue from vet services, reaching £655.1 million and accounting for a third of the company's total revenue. These findings are based on the company's preliminary results for the year ending March 27.
However, the retail arm of the business experienced a 16.6% decrease in underlying pre-tax profits, amounting to £72.9 million. A decline in revenue from retail sales by 1.8% year-on-year to £1.3 billion further exacerbated these struggles. The company attributed these retail setbacks to a protracted period of sluggish sales, attributed to weak footfall and challenging economic conditions in the UK.
Across all its operations, Pets at Home reported an underlying pre-tax profit of £133 million for the same period, a marginal increase from the previous year’s £132 million.
The group stated that the weaker retail performance was a consequence of a "subdued growth" in the pet sector, compounded by a soft UK consumer backdrop, deflation, and normalising levels of new pet ownership.
In light of these results, the company plans to open at least 10 new joint venture (JV) practices and extend 15 existing ones in the coming financial year.
Interestingly, Pets at Home's dividend for shareholders increased by 1.6% year-on-year, from 12.8p to 13p. Shares for the company, however, dropped 0.38% or 1.00p to 261.40p on Wednesday, marking a decline of over 7% in the past year.
The Competition and Markets Authority (CMA) is currently conducting an investigation into the veterinary sector. The investigation raises questions about potential competition issues and the impact on prices within the industry.
Chief executive Lyssa McGowan commented on the company's performance, stating, "The past two years have seen a profound transformation at Pets at Home... Our practices significantly outperformed a more subdued industry backdrop..." McGowan emphasized the group's confidence in the continuous growth of their veterinary business and their optimism about long-term prosperity. Nevertheless, she also acknowledged ongoing challenges, such as rising costs, soft retail footfall, and the ongoing CMA probe.
Investing in Pets at Home's veterinary arm might have yielded significant profits, as it experienced a 23.3% surge in profit and a 13% revenue growth in vet services. For those with interests in personal-finance, this division's impressive growth might be an attractive option, especially given the 23.3% profit increase and the fact that it accounts for a third of the company's total revenue. Moreover, the company plans to invest in its veterinary business by opening new joint venture practices and extending existing ones, indicating a focus on business expansion in this field.
