Poor sales put Pets at Home in doghouse

It would appear that Britons did not pamper their pooches this Christmas as much as they have in previous years.

Pets at Home, a retailer of pet food, accessories, veterinary and grooming services, said that subdued trading in its merchandise division, where revenues were flat compared with the previous year at £177.4 million, held it back in the vital third-quarter.

In previous years consumers treating their pets with items such as Ruffer and Tuffer dog mattresses and automatic feeding bowls have helped to boost merchandise sales, its biggest division.

However, despite subdued trading, Pets at Home said that overall it had recorded a 4.4 per cent rise in group revenue to £203.7 million in the 12 weeks to December 31. Most of this was the result of a strong performance in its grooming salons as well as its veterinary services arm where like-for-like sales rose by 7 per cent.

It said that services revenue, which includes fee income from joint ventures with vet practices, rose by 47.8 per cent to £26.3 million. Overall group like-for-like revenues rose by 0.1 per cent, held back by a 0.5 per cent decline in comparable merchandise sales.

Ian Kellett, chief executive of Pets at Home, said: “Vet services yet again performed strongly this quarter, where our strategy of providing a quality service to clients across both primary opinion and specialist referral centres is delivering results, and is a platform for continuing strong growth. In merchandise, while overall sales were softer than anticipated, online grew strongly reflecting the momentum gained from our investments in seamless shopping. We saw a good performance in our Christmas range.”

He said that Pets at Home was focused on offering “best value” products “starting with a very clear message to customers about the benefits of our high quality, UK-produced private label foods”. However, investors responded badly to the update and shares closed down 25¼p, or 10.6 per cent, at 212¾p.

George Salmon, an equity analyst at Hargreaves Lansdown, said that the merchandising drop could be a blip this quarter or could reflect changing shopping habits. He added that online “it’s not such a big fish” and suggested the trend to the internet may be faster than the group expected with big companies such as Amazon being more popular.

Analysts at Liberum said the results were disappointing, adding that it confirmed “fears that Pets is facing a number of structural challenges”.

Mr Kellett said that Pets at Home, with 437 shops and 145 stand-alone vets, was attracting new customers and maintained forecasts for the year.

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