An 80% crash in half-year profits to £8 million. Thirty vet practices set for possible closure. Reports of stockpiling pet food and products worth millions of pounds ahead of Brexit. What on earth is happening at Pets at Home?
When new boss Peter Pritchard took over as Pet at Home chief executive in May, investors hoped he would help stem some of the decay at the firm, where shares had been on a downward trajectory for the past three years.
But even he admits it has been a tough few months at the helm of the UK’s largest pet retailer.
“Since becoming the group CEO in May, I have had the opportunity to take stock of the wider group and shape my view of our future,” he said.
“Reviewing our vet group has been a priority. I recognise we have grown at pace and, more recently, have seen the pressure that rising costs and our fees are placing on this young business.
“We will need to recalibrate the business to deliver more measured growth whilst maintaining our plan to generate significant cash profits.”
Pets at Home is set to embark of a radical overhaul of its veterinary division that could lead to the disposal of up to 30 of its vet practices.
The overhaul involves buying out 55 joint venture vet practices from its 471-strong Vet Group chain. It said that 25 of these will become company-managed practices, while the remaining 30 will be placed under review - earmarked for potential closure.
Details of the plan emerged as the pet specialist reported an 80% crash in half-year profits to £8 million.
It put the plummet down to the restructure, which has cost it £29 million in the last six months.
The writing has been on the wall for the group veterinary sector for the past few weeks. Last month the chief executive of the veterinary business, Andrei Balta stepped down before Jane Balmain rejoined the company after previously establishing the joint venture Companion Care in-store vet model in 2001. She retired in 2014.
At the same time as Jane Balmain’s appointment Pets at Home appointed a new chief operating officer of retail – David Robinson – who joined after spending the past two years as managing director of Bestway Retail.
If re-structuring his management team and trying to turn round the company’s fortunes wasn’t enough to keep Peter Pritchard busy, then the threat of Brexit also loomed large.
Pritchard is reported as saying the group has already imported goods worth a “couple of million pounds” as part of no-deal Brexit contingency plans.
It is understood that 17% of ithe company’s goods come from outside the UK, and Pritchard said its stock supply could be disrupted in the event of delays at ports and borders under a no-deal Brexit scenario.
He said: “We don’t want families to run out of food for their pets.”
The first Pets at Home store was opened in Chester in 1991, by Anthony Preston, and in the following 27 years the retailer has become a real powerhouse in the UK although it has divided opinion throughout the pet industry with its big company attitude towards growth.
There could be some interesting times ahead.