Pets at Home FY profit seen ahead of expectations
By Michele Maatouk
Date: Thursday 24 Sep 2020
(Sharecast News) - Full-year underlying pre-tax profit at Pets at Home is set to be ahead of current market expectations of £73m as sales momentum returns across the business.
In an update at the end of July covering the period from 27 March to 16 July, the company said the last eight weeks of the period had seen sales momentum returning across all areas of the business. This was put down to a normalisation of customers' shopping habits as well as the re-instatement of services and permitted procedures across its retail and veterinary operations.
"This momentum has continued across both our retail and veterinary operations during Q2 FY21, delivering double-digit LFL growth in customer sales into and through the eight weeks to 10 September 2020," it said on Thursday.
Pets highlighted the "inherent resilience" in its pet care model and the underlying pet care market and said it continues to benefit from the adaptability of its operations to changes in customer behaviour and preferences, and its investment in omnichannel capacity and customer acquisition channels.
"Although Covid-19 continues to create a number of material uncertainties around the trading environment, including the risk of a second lockdown, based on trading year to date, and as a consequence of the sustained strength in performance we have seen, we now expect full-year underlying pre-tax profit to be ahead of current market expectations," it said.
Pets, which is due to announce its FY21 interim results in November, said its balance sheet and liquidity remain strong.
Broker Shore Capital lifted its recommendation on the shares after the update. "We believe that with the strong trading and earnings momentum and the self-help levers available to the company, the shares have further to rise and upgrade to buy from hold."
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