Pets at Home Group PLC (LON:PETS)’s third quarter revenue came in at £319.4m, an 8.7% rise on a like-for-like (LFL) basis. That reflects growth across both parts of the business.
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The group highlighted “inflationary pressures across the supply chain”, but is remaining competitive on price with several cost saving initiatives.
Peter Pritchard, CEO, said: "We are firmly on track to report a record year of sales and profit growth”. The group expects to report underlying pre-tax profit of £140m, above previous expectations.
Pets at Home Sees Rising Sales
Matt Britzman, equity analyst at Hargreaves Lansdown
“UK pet ownership shows little signs of slowing down as working from home becomes ever more popular and households favour locations that offer more space. And Pets at Home are making hay seeing third quarter sales rise 8.7% on a like-for-like basis, up an impressive 28.1% over a 2 year period.
As our pets take centre stage, there is a continuation of so called ‘pet humanisation’ with owners passing their own health and food principles onto their pets – even going as far as having their own social media following. That’s more opportunity for those in the business of servicing - it’s often the more premium brands that cater for these specific needs, giving a welcomed leg up to sales and margins.
There are some hurdles the group needs to overcome, inflation being called out in the recent update, but the groups got out ahead and a string of planned cost cutting and efficiency initiatives are keeping that in check for now. That leaves the overall picture looking positive, the online service is progressing nicely with over a third of online sales being serviced in store with click-and-collect, and the VIP initiative continues to grow - leaving plenty of cross selling potential with the vet and grooming services. This subscription model could also help PETS stay more resilient in the face of rising inflation, with repeat custom becoming ingrained in the business. There’s a lot to like and the groups trading someway above its long term average price/earnings valuation - so pressures on to keep the good news coming.
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