Despite a 5.5 per cent rise in like-for-like sales at Pets at Home (PETS) over FY2018, underlying pre-tax profits fell 12.3 per cent following a protracted squeeze in merchandise gross margins. The company has suffered due to adverse foreign exchange translations, which has forced a certain amount of price 'repositioning' in its business. New chief executive Peter Pritchard is, however, determined to remain upbeat, claiming that remedial actions are working, more customers are returning to shops, and that returning to profit growth remains a realistic target.
But he admits it “hasn’t been easy”. Growing omnichannel revenues by a whopping 75 per cent – ahead of the wider online pet market and close rivals – has meant further margin damage as the sales mix is weighted towards food products as opposed to higher-margin accessories. The group was also forced to raise its provision held for practice loans in its veterinary business by £5m, which contributed to the erosion at the bottom line.
Analysts at Liberum still expect pre-tax profits of £78.8m for the year ending March 2019, giving EPS of 12.5p, compared with £84.5m and 12.6p in FY2017.
| PETS AT HOME (PETS) | ||||
| ORD PRICE: | 151.3p | MARKET VALUE: | £757m | |
| TOUCH: | 151.1-151.6p | 12-MONTH HIGH: | 222p | LOW: 148p |
| DIVIDEND YIELD: | 5.0% | PE RATIO: | 12 | |
| NET ASSET VALUE: | 181p* | NET DEBT: | 15% | |
| Year to 29 Mar | Turnover (£m) | Pre-tax profit (£bn) | Earnings per share (p) | Dividend per share (p) |
| 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 |
| 2018 | 899 | 79.6 | 12.6 | 7.5 |
| % change | +8 | -17 | -17 | - |
| Ex-div: | 14 Jun | |||
| Payment: | 17 Jul | |||
| *Includes intangible assets of £993m, or 199p a share | ||||
