4th Jun 2015 09:10
LONDON (Alliance News) - Pets at Home Group PLC on Thursday posted a substantial rise in pretax profit for its 2015 financial year, flattered in part by costs it booked last year not recurring, but also by revenue growth in its merchandise and services businesses as it paid its maiden dividend.
The FTSE 250-listed pet retailer said its pretax profit for the 52 weeks to March 27 was GBP87 million, nearly quadruple the GBP22.5 million it posted a year earlier. The figure for the 2014 financial year was pulled lower by the company booking GBP29.7 million in exceptional costs related to its listing on the London Stock Exchange, but even stripping out those costs, pretax profit was up in the recent financial year from GBP52.2 million previously.
Revenue rose to GBP729.1 million from GBP665.4 million, driven by an 8.3% rise in merchandise revenue, a 9.8% rise in food revenue and a 6.6% increase in accessories revenue. Services revenue rose by 25%, with fee income from joint venture veterinary practices rising 31%. Like-for-like revenue grew 4.2%, with merchandise revenue up 3.7% and services revenue rising 10.7%.
The expansion of the margin in its services business drove an improvement in the group's gross margin in the year, up to 54.2% from 53.8%, with solid progression in its merchandise margin also helping.
The company said it will pay a total dividend for the year of 5.4 pence per share, its maiden payout.
The group added it is confident in its prospects for the coming year, with trading in the first quarter of its 2016 financial year in line with its expectations. It intends to open 20 to 25 new Pets at Home stores in the year, along with five Barkers dog-centric stores, 50 to 55 vet practices, and 55 to 60 groom rooms. In 2015, it opened 25 stores, 61 veterinary practices and 50 groom rooms.
"I am delighted to announce another year of progress as we continue to deliver on our targets for growth, with strong cash flows allowing us to deliver a dividend payment at the top end of our commitment," said Nick Wood, Pets at Home's chief executive.
Pets at Home shares were down 4.6% to 267.20 pence on Thursday, one of the worst performers in the FTSE 250.
In a separate statement on Thursday, Pets at Home also said it will move to a new divisional structure and has appointed chief executives for its retail and services arms. The retail arm will be headed by Ian Kellett, the current chief financial officer of the company. Pets at Home said the search for his replacement has started and he will remain CFO until a successor is appointed.
The services division will be helmed by Sally Hopson, the former customer and people director and chief executive of its veterinary business.
Total merchandise revenue, which includes food and accessories sales, rose to GBP666.1 million in the year, up from GBP615.1 million. Food revenue increased 9.8%, boosted by good performances from its dog and cat Advanced Nutrition products, dog treats and premium wet cat food. Advanced Nutrition revenue in total was up by 17% to GBP145.4 million, with a further boost coming from its Wainwright's label, which saw revenue rise 44%.
Accessories revenue was up by 6.6%, boosted by health and hygiene sales, a positive Christmas trading performance and by dog collars and leads. The group did see some weakness in cat litter due to changes made to its range and in its fish products, the latter reflecting weaker market conditions and the reallocation of space as its services division offerings are retrofitted into stores. It also saw weak trading in is equestrian business, Ride-away, where revenue fell year-on-year.
Services revenue, covering its joint venture vet practices and its Groom Rooms, which provides grooming services for pets, surged up 25% to GBP63 million. The rise in revenue reflects both the new openings and growing maturity of the vet practices and room rooms.
The group said its VIP club membership scheme reached 3.2 million members in the year, up from 2 million a year earlier, and the card swipe rate as its store till represented 65% of revenue in the fourth quarter of the financial year, up from 61% in the third quarter.
By Sam Unsted; [email protected]; @SamUAtAlliance
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