Blame the fleas. Believe it or not, that actually helps explain recent trading patterns at Pets at Home (PETS). The group reported like-for-like sales growth of 1.8 per cent during the first six months of the financial year, but a 10.5 per cent improvement in services revenues was offset by a minimal 1 per cent improvement in merchandise sales on the same basis. The latter was down to lower sales of health and hygiene products, something chief executive Nick Wood linked to excessive flea hatching in 2014. Last year's wet and warm conditions led to prolific flea infestations among household pets and thus higher sales of the group's anti-flea products. By contrast, this year's drier conditions have been bad for business.
Mr Wood doesn't want investors to dismiss the group's long-term growth prospects just because of "one short-term seasonal factor in a single category". Gross margins rose 27 basis points to 54.1 per cent, boosted by improved terms with suppliers, and cash profits were up 5.1 per cent to £60.7m. More than 700,000 customers also joined the group's VIP club, with members now totalling 3.9m.
Analysts at Stifel expect pre-tax profits of £95m for the year ending March 2016, giving EPS of 15p, compared to £87m and 13.5p in FY2015.
| PETS AT HOME (PETS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 276p | MARKET VALUE: | £1.38bn | |
| TOUCH: | 275.5-276p | 12-MONTH HIGH: | 312p | LOW: 195p |
| DIVIDEND YIELD: | 2.0% | PE RATIO: | 20 | |
| NET ASSET VALUE: | 162p* | NET DEBT: | 23% | |
| Half-year to 8 Oct | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 382 | 40.5 | 7.2 | 1.8 |
| 2015 | 405 | 40.9 | 6.5 | 2.0 |
| % change | +6 | +1 | -10 | +11 |
Ex-div: 10 Dec Payment: 08 Jan *Includes intangible assets of £959m or 192p a share | ||||
