Pets at Home’s (PETS) management may even have surprised itself with its last full-year update, returning to profit growth more quickly than expected. It has kept the momentum going in the six months to October 2019, delivering an 18.9 per cent increase in underlying pre-tax profits and guiding the full-year figure towards the top end of the current consensus.
The key to the group’s success has been the performance of the retail division, which saw like-for-like sales growth of 7.8 per cent to £479.8m. Like many retailers, Pets at Home has been building its online offering and reported 31.7 per cent growth in omnichannel revenues. This has been achieved in spite of reduced employee hours in-store, due to an efficiency drive that has seen it automate its flea-treatment subscription service. It is now automating all online order fulfilment.
The buyout programme for the group’s joint venture veterinary practices is now complete, with 36 of the 57 sites being closed. Changes to the fee arrangements have reportedly given the group's cash performance a boost, but underlying free cash flow fell 8.6 per cent to £24.9m in the period due to a change in the timing of corporation tax payments.
Broker Numis increased its pre-tax profit forecast by 6 per cent to £93m for the year to March 2020, giving EPS of 14.8p, up from £89.7m and 14p in FY2019.
| PETS AT HOME (PETS) | ||||
| ORD PRICE: | 248p | MARKET VALUE: | £1.24bn | |
| TOUCH: | 248-248.4p | 12-MONTH HIGH: | 249p | LOW: 109p |
| DIVIDEND YIELD: | 3.0% | PE RATIO: | 25 | |
| NET ASSET VALUE: | 181p* | NET DEBT**: | 15% | |
| Half-year to 10 Oct | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2018 | 499 | 8.0 | 1.20 | 2.50 |
| 2019 | 546 | 34.0 | 5.10 | 2.50 |
| % change | +9 | +327 | +325 | |
| Ex-div: | 5 Dec | |||
| Payment: | 10 Jan | |||
| *Includes intangible assets of £1bn, or 200p a share. **Does not include lease liabilities of £489m | ||||
