Specialist retailer Pets at Home (PETS), one of our '15 for 15' picks, has had a terrific run year-to-date. Yet the pet accessories-to-veterinary services provider is in the doghouse this morning after posting a subdued first quarter update, attributed in part to hot July temperatures.
Click here to read the latest missive from the pet foods-to-accessories retailer, which prompts a 4.6% share price reverse to 274.8p. The headline-hogging metric is a slowdown in like-for-like sales growth to 1.7% over the 16 weeks to 16 July, significantly below the 3% growth consensus estimate.
Management blames this on a poor season for health and hygiene products against testing prior year comparatives, as well as on 'a short period of very hot weather in July.' Searing temperatures impacted store footfall in the first two weeks of this month, though investors are always unimpressed when shopkeepers blame weather for top-line disappointments.
The good news is Pets at Home, guided by CEO Nick Wood (pictured below), expects to deliver against full-year profit targets – Bank of America Merrill Lynch still forecasts a rise in pre-tax profit from £87 million to £99 million – with a likely boost from second half new store openings.
For the quarter, total sales grew 6.4% to £224.2 million; drivers included advanced nutrition, including flagship own brand Wainwright's and vet and grooming services, all underpinned by the retailer's VIP club loyalty scheme. Services revenues are flourishing too, with fee income from joint venture veterinary practices up more than 26% to £10.2 million.
Besides opening new retail space, growth drivers for Pets at Home include the UK's burgeoning band of single-person households and childless couples, prepared to splash out on premium treats and pampering services for feline and canine companions. This attractive backcloth is reflected in the share price. After a faltering start post-IPO, they've bounded higher and remain 12.2% above their 245p issue price.