27th Nov 2024 10:42
(Alliance News) - Pets At Home Group PLC shares fell on Wednesday making it the worst performer among mid-cap stocks, as the pet care retailer warned of ongoing challenges in a “subdued market” despite delivering strong half-year results.
Shares were down 12% at 243.40 pence each, making the company the biggest looser in the FTSE 250 index in London on Wednesday morning.
Pets at Home provides customers with advice, products and care for their pets. It also operates a small-animal veterinary chain.
In the six months to October 10, the Cheshire-based company reported a 47% year-on-year surge in pretax profit to GBP51.1 million from GBP34.7 million.
Revenue for the period rose 1.9% to GBP789.1 million, compared to GBP774.2 million a year earlier, driven primarily by a 13% growth in Pets at Home's veterinary arm revenue to GBP352.3 million from GBP211.7 million, while revenue from its retail operation remained virtually flat at GBP696.3 million from 696.0 million.
Pets at Home declared an interim dividend of 4.7 pence per share, marking a 4.4% increase from the 4.5 pence declared a year earlier.
The company highlighted a weaker-than-anticipated retail environment, describing the current pet retail market as unusually subdued - a trend it expects to persist through the second half of the financial year. The company said it is confident that the slowdown is temporary and expects growth to return to historical levels, maintaining an optimistic view of the long-term prospects for the UK pet care market.
Pets at Home now forecasts "modest" year-on-year growth in underlying pretax profit from the GBP132 million reported in financial 2024, revising its earlier guidance. In August, it anticipated full-year pretax profit for financial 2025 in line with market consensus of GBP144 million, which would have represented a 9.1% increase.
The company said the reduced profit outlook for 2025 is mitigated by strong free cash flow, as it continues to optimise its investment plans. Pets at Home now expects capital expenditure of approximately GBP55 million for the year.
Chief Executive Officer Lyssa McGowan said: "The first half of financial 2025 was characterised by a subdued market, against which we outperformed. The bulk of our investments and peak operational risk are behind us and our market leadership and well invested platform underpin our confidence in continued outperformance."
By Eva Castanedo, Alliance News reporter
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