Pets At Home (PETS) saw its merchandise division return to growth during the year to March with revenue up 2.9 per cent to £717m once the extra trading week in FY2016 is discounted. But this was largely due to heavy promotions on its products, which pushed the group margin down by 35 basis points. Management said that the pet supplier will move away from its promotional strategy in the coming year to a more "competitive approach" and has already cut prices on some dog foods by 15 to 25 per cent. Although this sounds precarious on an already tightening margin, sales volumes on affected products are up 50 per cent since the changes took hold in January.
The services division benefited from the acquisition of referral centres, which drove revenue up by 44.5 per cent, although that falls back to 7.9 per cent on a like-for-like basis. Around 10 superstores, 40 to 50 vet practices and 40 to 50 grooming salons are planned to open in the current accounting period, even though the national living wage and apprenticeship levy are expected to increase operational costs by 4.5 to 5.5 per cent.
Analysts at Stifel expect adjusted pre-tax profit of £96.7m in the year to March 2018, giving EPS of 15.3p, compared with £96.1m and 15.1p in FY2017.
| PETS AT HOME (PETS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 166p | MARKET VALUE: | £830m | |
| TOUCH: | 165.8-166p | 12-MONTH HIGH: | 273.4p | LOW: 154.4p |
| DIVIDEND YIELD: | 4.5% | PE RATIO: | 11 | |
| NET ASSET VALUE: | 177p* | NET DEBT: | 17% | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 598 | 26.6 | na | na |
| 2014 | 665 | 22.5 | -13.8 | nil |
| 2015 | 729 | 87.0 | 14.4 | 5.4 |
| 2016 ** | 793 | 92.1 | 14.6 | 7.5 |
| 2017 | 834 | 95.4 | 15.1 | 7.5 |
| % change | +5 | +4 | +3 | - |
Ex-div: 15 Jun Payment: 14 Jul *Includes £990m of intangible assets, or 198p a share **53-week period | ||||
