Vet practice revenues up 24.6% at Pets at Home

Pets at Home is reaping the rewards of its Joint Venture vet practices as revenues have risen by 24.6% to £47.1 million. The figures were announced today as the company released audited preliminary results for the 52 weeks to 30 March.

In the statement Pets at Home announced that it hopes to roll out another 40-50 vet practices in 2018, along with a further 10 superstores and 40-50 grooming salons.

Ian Kellett, Group Chief Executive Officer, commented: “We have delivered a solid performance over the year with profits in line with expectations, reflecting in part the strength of our Joint Venture vet practices where our total income grew 24.6%.

"We are uniquely positioned as the only UK pet business delivering an integrated omnichannel and services offer, supported by our fast growing Vet Group, market leading private labels and expert colleagues. In an evolving consumer environment, we are taking steps to reposition prices on own label Advanced Nutrition and pet essentials and have made some initial changes to branded food lines.

"Encouraged by the reaction of our customers and having seen an improvement in Merchandise LFL to 1.0% in the 16 weeks since launch, we will move swiftly to deliver even better value. We are confident this is the right path for success and will give us a strong platform for sustainable future growth.”

The highlights of the results are:

Total income from Joint Venture vet practices up 24.6%* to £47.1m
Positive response to the launch of pricing initiatives in Advanced Nutrition private labels and everyday pet essentials. Pricing initiatives now extending to branded foods
Progress in Q4 with Merchandise returning to growth. Q4 LFLs#: Group 1.2%, Merchandise 0.5% & Services 7.1% when adjusted for the impact of Easter3
New openings in line with targets: 15 superstores, 50 vet practices and 50 grooming salons. A further two veterinary specialist referral centres acquired
Strong results from omnichannel investment with online revenue growth of 53%: launched colleague assisted ‘Order in-store’ and a subscription platform with potential for broader product application
Total dividend payable of 7.5 pence per share

FY18 guidance

Rollout: c10 superstores, 40-50 vet practices, 40-50 grooming salons
Group gross margin (100) – (200) bps, which includes price investment and FX cost
Operational cost growth (excluding depreciation and amortisation) of 4.5-5.5%, which includes cost from the step up in National Living Wage and Apprenticeship Levy, new store openings and operational cost savings
Depreciation and amortisation £34 – 35m, weighted more to the H1
Net interest £4-5m
Effective tax rate 20%
Capital investment c£40-42m – includes the remainder of the one-off energy savings project at £3m
Ordinary dividend payment maintained at least at the prior year level
Working capital outflow of around £5m to support vet practice growth
Non-underlying items: accounting treatment of the minority stakes owned by vet partners in the specialist referral centres may lead to a non cash operating expense charge of up to £2m. See page 13 for further detail

Board appointments

Paul Coby and Amy Stirling, Independent Non-Executive Directors, will step down from the Board at the Annual General Meeting on 11 July 2017. Paul will be succeeded by Stansilas Laurent, former President and CEO of Photobox and COO of AOL.com Europe. Amy Stirling, will be succeeded by Sharon Flood as Chairman of the Audit Committee. Sharon is the Chairman of ST Du Pont S.A and Audit Chair at Crest Nicholson plc and Network Rail.