Russ Mould, investment director at AJ Bell, said: “There wasn’t too much to get the market’s tail wagging in Pets at Home’s latest results. Badly in need of some renewed pep, the company posted a big, albeit not unexpected, drop in profit.
“Pets at Home’s retail business is really suffering from competition from non-specialist rivals like supermarkets, with their greater scale and ability to offer discounts, and also from consumers dialling back their spending on toys and treats for their feathered and furry friends.
“Britons famously love their pets but in tough times, it’s no surprise nice-to-have items are on the back burner. The company is cutting costs and slashing prices in an effort to revive its retail fortunes and there was at least a return to growth for this part of the business in the second half of the year and a robust start to the current financial year.
“The veterinary business proved resilient and the cloud hovering over this division from a probe by the competition authorities has largely dissipated at this point.
“Under new CEO James Bailey the company has rebased the dividend and launched a meaningful share buyback and he will likely continue to pull on levers like the customer loyalty scheme which should help drive repeat business.
“One area of growth could be insurance where the company has FCA approval for a ‘capital light’ offering which should launch later this year. It looks a sensible extension of the company’s existing services and should benefit from the customer sign-ups and data at its disposal.”
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