Pets At Home has posted a jump in annual sales but has seen profits fall back. The pet retail group described its performance as ‘a pivotal year building our platform for future growth’.

Underlying pre-tax profits fell 3.2% to £132m, in line with internal expectations. Pets At Home said profits had been hit by short-term availability issues after it moved into its new distribution centre, as well as a weaker performance in discretionary accessories.

Lyssa McGowan, Chief Executive Officer said: “FY24 has been a pivotal year for the business, having delivered some key building blocks of our platform for long term growth. I am proud of the progress we have made in the year; we relaunched our brand, opened our new DC, built our new digital platform, made progress in our sustainability agenda, and enhanced our physical estate. The business has come together brilliantly to navigate any challenges faced this year, and we have delivered some key milestones of our strategy.

“Our medium-term strategy and financial framework is unchanged and, looking ahead, the fundamental strengths of the business position us well to deliver growth. We hold a leading position in a structurally growing market, with an unrivalled retail store network, and a unique, differentiated and integrated vet business. We know the nation’s pets better than anyone else, with over 10 years of analytical data on 10 million pets, and we now have a best-in-class digital platform, and a modern efficient DC.

“Above all else, we have the best colleagues in the industry, who use their passion and expertise to guide customers through their pet care journey every day. All of this positions us incredibly well as we continue to execute our strategy to build the world’s best pet care platform.”

Business Highlights

FY24 has been a foundational year for Pets at Home. We have delivered the key strategic elements that will form the platform for future growth. We have:

• Launched digital platform to consumers, an important milestone in the digitisation of the business, with our new app and website positioned to bring together everything owners need to care for their pet.
• Brought our new DC onstream, with all stores now being served from a single site and availability at structurally higher levels. We will complete the transition of our online business in the coming year.
• Continued progress in growing our vet footprint, with 3 new vet practices, 26 practice extensions, and 10 company-owned to JV conversions, supported by further progress on vet talent.
• Invested in our pet care centres with 5 new openings and 41 store refits.
• Grown our large, loyal customer base. We now have 7.8m active Pets Club members, up 2% YoY with strong retention and a continued normalisation in new Puppy & Kitten sign ups as expected.
• 1.7m subscriptions, now generating 10% of consumer revenue. The launch of our digital platform will offer customers an enhanced subscriptions capability with improved choice and flexibility.
• Launched our new unified Pets brand, bringing together all of our products and services under one master brand reflecting our consumer positioning as a provider of all your pet care needs.
• Accelerated range innovation, introducing new frozen ranges, launching an own brand freeze-dried range, and exclusively partnering with Butternut Box to offer freshly-cooked dog food to consumers.
• Progressed our sustainability agenda, reducing our Scope 1 & 2 emissions by a further 3.5%, raising over £9.2m for pet charities, feeding 2.7m pets for a day through our pet food bank partnership with Blue Cross, and donating over 16,000 hours to local communities.

Financial Highlights

• Consumer revenue grew 6.9%, in line with our medium-term ambition, to £1.9bn. Underlying consumer demand was resilient with structural trends underpinning sustained market growth.
• Total Group revenue growth of 5.2% to £1.5bn, with Group like-for-like# (LFL) revenue up 5.1%.
• Vet Group revenue grew 16.8%, and LFL# up 16.5%, with record sales supported by higher Average Transaction Value, mix and visits as we increased clinical capacity.
• Retail revenue grew 4.0%, and LFL# up 4.1%. Q4 LFL was in line with expectations with continued volume growth and slowing inflation in food, and softer performance within accessories.
• Underlying PBT of £132.0m is down 3.2% YoY as guided, impacted by short-term availability issues as we transitioned to our new DC and weaker performance of discretionary accessories. Returning accessories to growth is a key focus in the year ahead and we have a strong plan to do so.
• Statutory PBT was £105.7m, down 13.7% reflecting the decline in underlying PBT and non-underlying costs of £26.3m, mostly associated with our DC transition and our support office consolidation.
• Underlying basic EPS was 20.7p, down 9.0%, and statutory basic EPS was 16.6p, down 19.0%.
• Total dividend per share held at 12.8p, final dividend held at 8.3p.
• Free cash flow# down 29.7% to £69.0m reflecting YoY profit shape and the phasing of investments.
• Balance sheet remains robust with net cash# of £8.8m (before lease liabilities of £380.9m). Cash and cash equivalents were £57.1m at the end of the year.
• £25m share buyback announced for FY25, having completed £100m in buybacks over last 2 years.

Current trading and outlook   

No change to FY25 underlying PBT guidance. Whilst the external trading environment has been subdued, overall pet care spend has proven resilient, and in the year ahead, we should begin to benefit from previous investments and key productivity programs.

Over the first 6 weeks of the year, we have seen low double-digit growth in our Vet Group, with Retail at -2%, broadly in line with plan. Retail LFL currently reflects the annualization of our strongest comparative periods, and some short term disruption as we transitioned to our new digital app from the legacy web platform. We are currently projecting that these impacts will ease from Q2 onwards.

Market growth in recent quarters has been impacted by easing inflation, continued caution amongst consumers, and the timing impacts of normalised numbers of new puppies and kittens. Importantly through this period we have consistently won share in our key food category, and are currently expecting industry growth to progressively return closer to historic levels over the coming quarters.

For FY25:

• We are comfortable with current analyst consensus for underlying PBT, currently c£144m.
• We expect non-underlying costs of c£7m reflecting further transition costs for the DC (£3m) and one-off support office restructuring costs (£4m).
• Effective tax rate is expected to be 26%.
• Plan for capex of £60m.
• Planning for a further £25m share buyback, following the £100m completed over the last 2 years.