Shares in Pets at Home (PETS) topped the FTSE 350 leaderboard on Friday, gaining 5.5% to 404p following yet another full-year profit upgrade from the UK’s leading pet care company.

The designated ‘essential’ retailer flagged a continuing strong performance in the current fourth quarter, with Pets at Home benefiting from its stores and vet practices remaining open during the latest national lockdown.

The company now anticipates full-year underlying pre-tax profit to be approximately £85 million, ahead of previous guidance of ‘at least £77 million’ or a 10% uplift, and a figure that includes the repayment of £28.9 million of business rates relief.

POSITIVE MOMENTUM PERSISTS

Despite uncertainties from Covid and potential supply chain disruption from the UK’s exit from the EU, Pets at Home continues to profit from the lockdown pet craze.

Performance over the last eight weeks has been ‘ahead of expectations, with continued strong and broad-based growth across all channels and categories’, said the Peter Pritchard-led group.

PLAY ON RISING PET OWNERSHIP

Commenting on the update, Shore Capital said there is ‘no doubt that Pets at Home has been a Covid winner benefiting from remaining opening, together with increased levels of pet ownership in the UK with more consumers working from home under lockdown restrictions.’

The broker likes the Pets at Home strategy, ‘with its own self-help levers in a structurally growing market, together with new revenue streams from subscriptions’ and points out the work undertaken through its VIP membership scheme ‘will allow more personalised promotional offers to be targeted to consumers during the lives of their pets’.

Numis Securities said: ‘Whilst this upgrade to an extent reflects an unwind of some of the conservatism and inherent uncertainty at the time of the 3Q trading update a month ago, it also points to encouraging momentum.

‘That continues to leave forecasts well underpinned, and in that context we find valuation unchallenging. With momentum supported by market growth, and investments into data, proposition and subscription opening up new opportunities the group is uniquely well placed to take advantage of, we remain enthused.’

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Issue Date: 26 Feb 2021