Pets At Home (PETS) shares soar 7%: Is it the right time to buy? - Kalkine Media

November 23, 2021 01:00 PM GMT | By Nidhi Gupta
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Highlights

  • Pets At Home’s pre-tax profits were up by 81.3% to £70.6 million for the half-year ended 7 October 2021.
  • Pets At Home Group reported an 18% year-on-year surge in revenues to £677.6 million in the first half of the year.
  • The board of Pets At Home Group announced an interim dividend of 4.3 pence per share to shareholders, representing an increase of 72% year-on-year.

Shares of Pets At Home Group Plc (LON: PETS), an FTSE 250 listed retailer of pet supplies and products such as toys, food items, medicines, accessories, bedding, and pets, surged around 7% to trade at GBX 489.80 on 23 November 2021 at 9:57 AM BST after the announcement of its first-half results for FY22.

Surging pet ownerships drives profit

The UK market has registered a surge in pet ownership. According to the Pet Food Manufacturers Association, over 3 million households in the UK have got a pet since the pandemic and currently, there are nearly 12 million cats and 12 million dogs across UK households. This has greatly benefited the Pets At Home business as sales touched new records, driven by rising demand for premium pet food and products.

However, Pets At Home said that the business was facing difficulties due to supply chains issues. Despite the underlying issues that continue to grapple the entire retail sector, Pets At Home’s pre-tax profits were up by 81.3% to £70.6 million for the half-year ended 7 October 2021.

Pets At Home Group also reported an 18% year-on-year surge in revenues to £677.6 million in H1, underpinned by strong volume growth and a rise in the number of active customers. The robust revenue growth includes retail sales growth at 21.9%, omnichannel sales increased at 21.5%, and vet group revenues grew at 26.2% on a like-for-like basis.

Segmental performance

Pets At Home’s food revenues rose by 21.4% year-on-year to £336.7 million in H1 FY22 compared to £277.4 million in H1 FY21. Strong growth in demand for consumables, training accessories and dog toys propelled a 20.9% revenue growth year-on-year in the company’s accessories segment to £257.7 million compared to £213.2 million in the previous year.

The revenues from the grooming segment registered the fastest growth at 62.2% in H1 to £15.5 million from the previous year’s £9.6 million, fuelled by the closure of all salons for 10 weeks during the pandemic and high demand for pet grooming products across UK households.

Dividend announcement

The board of Pets At Home Group announced an interim dividend of 4.3 pence per share to shareholders, representing an increase of 72% year on year.

Future growth strategy

As the spend per customer rises, Pets At Home aims to leverage from the rising investments in capacity and capability expansions. Despite short-term industry challenges such as supply chain problems, the company plans to continue targeting record annual sales and profit growth.


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