Pets at Home has reported a significant decline in annual profits, driven by weaker retail sales and strategic price reductions. The pet products retailer and veterinary group announced that pre-tax profits fell by 28.3% to £86.5 million for the 52 weeks ending March 26, compared to the previous year.
Retail Division Challenges
The company attributed the profit slump to weaker profit margins in its retail division, partly due to investments in pricing. In January, Pets at Home slashed prices on approximately 1,000 products in an effort to revive its struggling performance. The retail arm has faced intense pricing competition from non-specialist retailers, including supermarkets, particularly in pet food and related products.
Overall group revenues declined by 0.8% to £1.47 billion year-on-year. Within the consumer operation, retail revenues fell by 1% for the year. However, the vet division showed resilience, with revenues increasing by 5% compared to the prior year.
Turnaround Progress
Despite the challenging results, new chief executive James Bailey expressed optimism about the company's turnaround plan. Bailey, formerly of Waitrose, joined Pets at Home earlier this year to lead the recovery efforts. He stated: "Pets at Home is a business with many strengths, a strong shared purpose and great potential, and I am excited to lead it through its next chapter."
Bailey highlighted that "material progress has been made over the past six months stabilising the retail business, delivering improved satisfaction and better availability." He outlined future opportunities, including "profitable volume-led growth in retail" while continuing to expand the vet business and launching a new insurance offering.
The company's focus on pricing and customer experience appears to be part of a broader strategy to regain market share and improve financial performance in the coming year.
