Pets at Home hikes dividend as COVID pet boom helps retail sales soar past £1bn

·3-min read
SOUTHEND ON SEA, ENGLAND - JULY 03: A general view of a Pets at Home pet shop, vet surgery and pet grooming retail outlet store on July 3, 2018 in Southend on Sea, England. (Photo by John Keeble/Getty Images)
Like-for-like sales for the year ended March 25, 2021 grew 8.7% across the group and there was a 34% growth in subscription sales. Photo: John Keeble/Getty Images

Pets at Home's (PETS.L) retail revenue hit £1bn ($1.4bn) for the first time, up by 8.7% as lockdown restrictions due to the pandemic encouraged people to get pets. The company also hiked up its dividend by 10%.

Pets' final dividend per share was 5.5p, an increase of 10% year-on-year, "reflecting our strong cash generation and robust balance sheet" and giving a total dividend of 8p for the year, up 7%.

Like-for-like sales for the year ended March 25, 2021 grew 8.7% across the group and there was a 34% growth in subscription sales. 

Underlying pre-tax profits came in at £87.5m, ahead of previous guidance. Although this is a fall of 6.4% compared to the year prior, it reflects a COVID impact of round £30m and the repayment of business rates relief. 

It expects underlying pre-tax profit for the year ending 31 March 2022 to be in the range of £120m to £130m.

Shares in the company ticked 1% lower on Thursday morning.

Pets at Home's stock ticked lower on Thursday morning. Chart: Yahoo Finance UK
Pets at Home's stock ticked lower on Thursday morning. Chart: Yahoo Finance UK

Pets at Home said there was a roughly 8% increase in UK pet ownership over the past year, which has raised the outlook for growth across its market and "in conjunction with our expectations of continuing to win market share, provides a supportive backdrop to the £600m customer revenue opportunity we see across our business over the medium term."

Its loyalty clubs saw record periods of new customer registration, while new clients across its veterinary estate helped increase practice profitability and cash flow.

"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," said CEO Peter Pritchard.

Read more: European stocks subdued as rising COVID infections cause concern

He added that the company will continue to invest in infrastructure, further digitise its business and leverage its "extensive and unique" dataset to provide insight throughout the customer lifetime to support investment decision-making that will drive quality and profitable growth.

There was a boom in pet ownership last year — as many as 2m people acquired new pets last year, according to industry figures.

“With millions working from home or furloughed from their jobs, many have clearly considered the numerous benefits of pet ownership. Now, more than ever, we know that the companionship and joy pets can bring to people’s lives shouldn’t be under-estimated," said Nicole Paley, the deputy CEO of the Pet Food Manufacturers’ Association.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown said "there is a risk that the jaws of the pet boom could clamp shut as more people return to the world of work once more and put off the purchase of a furry friend."

But she said "Pets At Home is geared up to supply new pandemic owners with a lifetime of goods and services and has a growing set of data of customers it’s able to draw on to expand its business."

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