- Retailer posts resilient annual results
- Raises dividend by 36%
- Vows to remain competitive on price
Shares in Pets at Home (PETS) bounded 9.1% higher to 306.2p to top the FTSE 250 after the UK pet care leader posted a better than expected 65.3% surge in annual underlying pre-tax profits to £144.7 million as it capitalised on the pet ownership boom.
Drawing confidence from a balance sheet flush with £66 million net cash, the pet equipment-to-veterinary services seller also raised the final dividend by 36% to 7.5p and said it plans to launch a £50 million share buyback.
With consumers feeling the pinch, Pets at Home also vowed to keep prices competitive in the face of industry-wide cost pressures and is confident full year 2023 pre-tax profits will be in line with the analyst consensus, currently £151 million with a range of £146 million to £157 million.
PETS HAS POSITIVE MOMENTUM
Total revenue grew by 15.3% to almost £1.32 billion in the year to March 2022 amid continued momentum across the business, with Pets at Home generating like-for-like growth in the retail and vet divisions of 15.8% and 17.1% respectively.
The retailer insisted the pet care market remains ‘robust and in growth, with registrations into our Puppy & Kitten club continuing well ahead of pre-pandemic levels and growth in customer spend maintained across all categories and channels’.
Peter Pritchard, who hands over the CEO baton to former Sky chief customer officer Lyssa McGowan in June, said: ‘We are well placed to accelerate our growth in market share. The robust backdrop of the UK pet care market, coupled with our clear strategic priorities, proven omnichannel model and strong executive team, mean that I hand over leadership of this great business to Lyssa McGowan with the utmost confidence that Pets at Home will continue to create value for all stakeholders in both the near and longer-term.’
THE EXPERT’S VIEW
Russ Mould, investment director at AJ Bell, explained: ‘The market might have been wrong to doubt the robustness of Pets at Home, judging by its latest results. Prior to publication, its share price had fallen 40% year-to-date amid fears over a drop in consumer spending.
‘Pets at Home’s full-year figures show that pet lovers are still happy to splash the cash on their tabby or poodle. Investors who remained loyal to the company are now getting a big reward in the form of a 36% increase in the final dividend.’
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (James Crux) and the editor (Steven Frazer) own shares in AJ Bell.