- Group underlying pre-tax profit up 0.7%
- £25 million share buyback announced
- Shares up 32% year-to-date
Shares in Pets at Home (PETS) gained over 4% to 273p in morning trading as investors welcomed the pet food-to-veterinary service group’s £25 million share buyback and a total dividend increase of 1.6% for shareholders despite a challenging macro backdrop.
Group underlying pre-tax profit was up 0.7% to £133 million for the year ending 27 March and the company offered no new guidance, as it reiterated group underlying pre-tax profit in the range of £115 million to £125 million.
Pets at Home also announced a new insurance venture – a Pets branded proposition to the circa £2 billion pet insurance market.
The company said it expects to incur start-up losses for around two years as it moves to launch and build its insurance venture.
STRONG BALANCE SHEET
The company said its balance sheet remained robust with adjusted net cash of £6.2 million and announced a £25 million share buyback for full year 2026.
It has already completed £125 million in buybacks in the last three years.
The company said FCF (free cash flow) was up 21.5% £83.8 million ‘reflecting the increase in pre-tax profit, lower non-underlying costs and lower share purchases linked to EBT (employee benefit trust).
Pets at Home saw consumer revenue for its vet group rise 13% due to record sales supported by higher visits, average transaction values and significant growth in care plan revenues.
The company is expecting to deliver 10 new vet practices in full year 2026, together with a further 15 extensions.
However, retail consumer revenue was down 1.8% impacted by a period of subdued growth in the pet sector due to a soft UK consume backdrop throughout full year 2025, deflation and normalising levels of new pet ownership.
WHAT DID THE CEO SAY?
Lyssa McGowan, CEO said: ‘The past two years have seen a profound transformation at Pets at Home. We have moved from a business with a strong presence in pet retail and vets, to a true pet care platform.
‘We now have a platform that is fit for the future and capable of delivering sustained outperformance and market share gains through delighting consumers and increasingly fulfilling all of their pet care needs.
‘In full year 2025, we also saw another outstanding year of growth in our vet’s business, fuelled by the commitment and expertise of our partners, supported by our best-in-class scale services, platform benefits and industry knowhow.
‘Our practices significantly outperformed a more subdued industry backdrop and delivered this progress despite the ongoing uncertainty of the Competition and Markets Authority (CMA) investigation - further demonstration of the power of our unique joint venture model.’
RESULTS IN LINE
Panmure analysts Wayne Brown and Anubhav Malhotra said: ‘Full year 2025 profits have landed exactly where we were expecting. We know that more costs are holding back profit progression in full year 2026 - relating to start-up costs for a new revenue channel, higher variable costs to reward staff and a prudent outlook in the company’s ability to use price as a lever to offset regulatory and tax hikes.
‘We remain confident that Pets will grow faster than the market and while sign-up of vet care plans will moderate – Vets will continue to achieve high rates of growth just slower than the exceptional past few years.’
Russ Mould, investment director at AJ Bell said: ‘A few things are working against the retail side of the business. The boom it experienced during the pandemic when the lockdown puppy and kitten phenomenon took hold has eased off.
‘Competition from non-specialists, like the supermarkets, has ramped up. And, while Britons are famously devoted to their feathered and furry friends, pressure on consumer spending means they are less likely to splash out on extras like toys and treats and are focusing instead on the basics.
‘At the same time, costs – particularly relating to wages – have gone up. The veterinary side of the business is a much happier story – although the competition regulator’s probe into the sector will continue to cast a pall until it is fully resolved.’
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (Sabuhi Gard) and the editor (Martin Gamble) own shares in AJ Bell.
