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The surge in pet ownership during the coronavirus period has boosted trading at the country’s largest pet retailer Pets at Home.

The group saw total revenues grow of 7.9% to £1.14bn in the 12 months to 25 March 2020, with retail revenues hitting £1bn for the first time due to growth of 8.7% in the year.

Pets at Home said it benefitted from the estimated 8% increase in UK pet ownership over the past year, which has raised the outlook for growth across its market.

Group like-for-like revenues were up 8.7%, or 17.0% on a two-year basis, while growth accelerated in the second half of the financial year to 12.4%.

Retail like for like growth of 8.8% rose to 11.9% in the second half and annual sales were up 17.3% on a two-year basis.

Online revenues grew 71.7%, or 119.0% on a two-year basis, with previous investment in distribution capacity and fulfilment capability supporting participation of retail revenue of 15.8% in the year up from 10.0% in the prior year

Food revenue grew by 6.6% to £551.5m, reflecting its success in recruiting new customers throughout the year, as more people became pet owners for the first time.

Accessories revenue grew 15.0% to £431.4m, with significant growth in categories such as leads and bedding as humanisation continues to drive customer spend.

Grooming revenues declined by 29.2% in the year to £19.6m due to the closure of all salons for the first 10 weeks of the year, while Vet Group revenues grew 1.6% to £123.2m.

The booming sales helped group underlying profit before tax reach £87.5m, which is ahead of guidance but represents a decline of 6.4% due to an adverse Covid-related impact on profit of approximately £30m and the repayment of £28.9m of business rates relief.

Second half underlying profit before tax grew by 22% after adjusting for the timing of business rates repayment.

Group statutory pre-tax profits was up 35.5% to £116.4m including £30.2m relating to profit on the disposal of its Specialist Group.

CEO Peter Pritchard commented: “We ended this unprecedented year a far stronger pet care business. Despite challenges to how we were able to do business, we grew our market share across all channels and our underlying growth trajectory accelerated. Our loyalty clubs saw record periods of new customer registration, strong growth in subscription customers increased the visibility and quality of our sales profile, whilst new clients across our veterinary estate helped increase practice profitability and cash flow. We achieved all of this while remaining mindful at all times of doing the right thing for all our stakeholders.

“Covid-19 has structurally changed the dynamics of the pet care market. We estimate that the rising level of pet ownership, combined with structural demand drivers such as premiumisation and humanisation, has increased the outlook for growth across our addressable market, and in conjunction with our expectations of continuing to take market share, provides a tailwind to the £600m customer revenue opportunity we see across our business over the medium term.

“We will, as the UK’s leading omnichannel pet care provider, capitalise on this opportunity through continued investment in our infrastructure, further digitising our business and leveraging our extensive and unique dataset to provide insight throughout the customer lifetime to support investment decision-making that will drive quality and profitable growth.”

Pets at Home said the start of its current financial year has seen a continuation of the strong momentum across its retail and veterinary operations.

Although caution remains about Covid variants and return to normalcy, it anticipates that group underlying pre-tax profit for the current year will rise to £120m-£130m.

Pets at Home shares have fallen back 2.7% to 450.8p on the news.

Morning update

Sucralose producer Tate & Lyle posted a 6% rise in annual pre-tax profits driven by strong growth in its food and beverage solutions business.

Overall revenues were up 1% to £2.8bn on an adjusted basis, and down by 3% on a statutory basis.

Its core food & beverage solutions business saw volume increase by 3% with revenue 6% higher in constant currency at £970m as stronger customer demand for ingredients used in packaged and shelf-stable foods for consumption in-home more than offset reduced demand for ingredients used in food and drink consumed out-of-home.

It said momentum built as the year progressed, benefitting from growing demand for healthier food and beverages that are lower in sugar and calories, with cleaner labels and added fibre and a gradual recovery in out-of-home consumption.

Adjusted operating profit in the segment was 12% higher in constant currency at £177m with good operational performance and strong cost discipline.

Its primary products business, of which it is exploring a sale, saw volume was 5% lower with sweetener volume 7% lower and industrial starch volume 6% lower, both reflecting the impact of the Covid-19 pandemic.

Revenue of £1.7bn decreased by 2% in constant currency, while adjusted operating profit was 5% higher in constant currency at £158m.

Sucralose volume was in line with the prior year with customer orders slightly higher in the second half despite continued softness in beverages consumed out-of-home.

Overall, ·group adjusted profit before tax was up 6% to £335m.

CEO Nick Hampton said: “Despite all the challenges thrown at us by the pandemic, we progressed our strategy, grew our profits, strengthened our financial position and increased our dividend.

“Both businesses performed well, with the impact of the pandemic starting to ease through the second half.

“Since we announced our strategic priorities in 2018, we have delivered three years of consistent progress and built a strong platform for future growth. We are exploring the potential to separate our Food & Beverage Solutions and Primary Products businesses through the sale of a controlling stake in Primary Products to a long-term financial partner. This transaction would create two businesses, each able to focus on its own strategic and capital allocation priorities - Tate & Lyle focused on Food & Beverage Solutions, and Primary Products in partnership with a new investor with a long-term commitment to growing the business.”

Elsewhere this morning, PayPoint has posted a 9% reduction in annual revenues driven the impact of Covid-19.

Net revenue from continuing operations fell 9.1% to £97.1m due to the impact of the coronavirus on UK bill payments, ATM and parcels, and partially offset by growth in UK card payments, eMoney and service fees.

The prior year also included £3.8m net revenue from the British Gas contract now ended; excluding this expected impact, revenue from continuing operations decreased by £16.6m (11.5%) to £127.7m.

Profit before tax from continuing operations was down to £19.4m from £50m, reflecting the decrease in net revenue from continuing operations and £16.1 million of exceptional items, including expenses relating to acquisitions and refinancing and a provision of £12.5m made in relation to Ofgem’s Statement of Objections.

Underlying profit before tax from continuing operations, excluding exceptional items, was down 19.3% to £35.5m.

PayPoint said it had had a “transformative year” with a “significant step change in strategic delivery and a solid financial performance against the backdrop of Covid-19”.

CEO Nick Wiles commented: “This has been an exceptional year for PayPoint in which we have delivered a step change in our strategy while responding to the impact of Covid-19 on the business, our clients, retailer partners and their customers.

“Against the background of delivering a solid financial performance for the year, we have been focused on delivering a step change in our strategic delivery through making the necessary business acquisitions and investments to strengthen our capabilities, broaden our retailer proposition, improve engagement and service quality for our clients and retailers and identify new areas of growth in our core UK market. We have made positive progress in this transformation of the business with more to achieve in the year ahead to strengthen our platform and maximise the opportunities available.

“While early in the year, we are already seeing some encouraging signs of continuing renewed activity in a number of areas of our business, in particular in card processing and parcels. I am confident the steps we have taken during the financial year have strengthened the business and better positioned us for both recovery in our legacy businesses and growth in our developing markets. As a result, we are confident in the business delivering further progress in the year ahead as we take advantage of the accelerated growth opportunities across our key markets.”

On the markets this morning, the FTSE 100 is again flat at 7,027.5pts.

Risers include Total Produce, up 4.7% to 228.9p, Premier Foods, up 1.9% to 111.8p, AG Barr, up 1.5% to 537p and Marks & Spencer, up 1.3% to 171.4p.

Fallers so far today include Tate & Lyle, down 5.1% to 773.2p, C&C Group, down a further 5% to 257.6p and Naked Wines, down 2.1% to 832p.

Yesterday in the City

The overall FTSE 100 ended the day flat at 7,026.9pts.

Marks & Spencer was a major riser yesterday, jumping 8.5% to 169.2p to hit its highest level since the pandemic, despite reporting a pre-tax loss of £209.4m in the 53 weeks to 3 April.

Other risers included Finsbury Food Group, up 7.7% to 91p, Glanbia, up 3.1% to €14.06, Associated British Foods, up 2.6% to 2,350p, Kerry Group, up 1.9% to €112.45, AG Barr, up 1.7% to 529p and Compass Group, up 1.7% to 1,630p.

Fallers yesterday included C&C Group, which dropped 11.4% to 270p as it fell to an operating loss of €60m as revenues more than halved to €736.9m on the back of hospitality closures during the coronavirus pandemic.

Other fallers included Ocado, down 3.8% to 1,929.5p, McColl’s Retail Group, down 3% to 35.1p, Nichols, down 2.6% to 1,525p, Science in Sport, down 1.9% to 78.5p, THG, down 1.4% to 601.5p and Hotel Chocolat, down 1.3% to 375p.

 

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