Pets at Home share price leaps as lower prices pay off | City A.M.
Price cuts and instore vets helped Pets at Home to increase sales in the first few months of the new financial year this morning, sending shares higher.
The retailer’s share price was at a new low of 113p yesterday, but this morning’s update boosted it by 10 per cent.
The figures
Overall revenue was up 8.1 per cent to £277.4m in the 16 weeks to 19 July.
Retail revenue, which accounts for the bulk of the business, grew 6.9 per cent to £245m. Omnichannel shopping revenue jumped 47.3 per cent to £19.1m.
The group also makes money from its instore vet services, which brought in £32.4m revenue in the period, an increase of 18.4 per cent.
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Why it’s interesting
Pets at Home faces tough competition from online retailers. The group has lowered its prices to face up to the challenge, halving its overall price gap with online over the past 18 months. It has also added an “easy repeat” option for delivery on several products.
Analysts at Shore Capital praised the progress made, saying: “The statement reads positively, in our opinion, and goes some way to vindicate our view that spend in the petcare industry is quite defensive within the broader retail world and also that the Pets proposition is rights sizing itself and transforming to regain a competitive position against the backdrop of the pressure from discount and online channels.”
The group also said this morning that it would incur a cash cost of £1.6m after deciding not to go ahead with the opening of two new stores. Liberum analysts said this was “probably the right thing to do”.
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What Pets at Home said
Chief executive Peter Pritchard said it had been the group’s “biggest ever summer” with successful new initiatives and promotions.
“We have made great progress with these initiatives, particularly the ongoing momentum in Retail more than a year on from the start of our price repositioning programme,” he said. “But I believe we need a sharpening of focus to become a business that will continue to win over the long term, where it is essential that we maximise our assets and data as an integrated pet care business and reinvigorating the customer experience in-store becomes key.”
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