“All eyes” are on new Pets at Home CEO James Bailey, as the retail and vet group’s turnaround plan kicked in.
Bailey, in place since late March, has taken the reins of a turnaround plan announced by the group six months ago.
Full-year results released this morning (27 May) showed the plan had started to deliver, with sales and volume growth in the second half of the year.
But while the group’s overall revenue was up 1% to £2bn in the year to 26 March, retail sales were still down 1% to £1.3bn.
Pets at Home has slashed prices to win back customers, and called a 12% price cut on 1,000 food items “back where we need to be”. The retail business’ gross margin was down around 180 basis points, with 80bp made up of planned price investment.
Underlying pre-tax profits for the group fell 30.2% to £92.8m.
Bailey said he had spent his early weeks “immersing himself in the business, which he said had “many strengths, a strong shared purpose and great potential”.
He joined the business in March alongside its new CFO, Sarah Pollard, who joined from home and personal care giant PZ Cussons.
“We are the clear leader in the growing UK petcare market with a unique set of highly complementary businesses,” Bailey said. “We have considerable, sustainable competitive advantages including our unrivalled reach through our 460 petcare centres, our sector-leading vet business, our large and loyal customer base and well invested infrastructure.
“Material progress has been made over the past six months stabilising the retail business, delivering improved satisfaction and better availability. We have the opportunity now to build momentum through profitable volume-led growth in retail while continuing to execute the proven growth levers of our vet business and launch our insurance offering.”
Financial advisory group BTG managing partner Julie Palmer said “all eyes” would be on Bailey to see if he can return the group to the highs of profitability it had previously enjoyed.
“Rising costs and inflation brought about by the outbreak of war don’t seem to have deterred shoppers from splashing out on their pets in the first part of this year, but Pets at Home will be hoping discretionary spending doesn’t take a big hit as the year progresses,” she added.
“The group has worked hard to make cost efficiencies and drive sales volume, but the rug could be pulled from under the retailer should demand and sales drop suddenly and operational, employment or supply chain costs climb.”
Panmure Liberum analyst Ben Hunt added progress had been good so far, with profit levels in line with expectations.
“The turnaround strategy is gaining traction, supported by good momentum in retail, and the vet business remains solid,” he said.
“With a new CEO and CFO now in place, investor focus will shift to the strategic and operational actions they may implement.”
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