One of the UK's leading pet care retailers, Pets at Home, has issued a stark warning about its future after reporting a catastrophic collapse in retail profits, triggering an urgent turnaround plan.
Steep Decline in Profits and Retail Performance
The company announced that its half-year profits had fallen by more than a third, landing at £36.2 million. The situation was far more severe within its core retail business, where underlying profits experienced a staggering drop of 84.1 per cent. This dramatic plunge occurred despite a simultaneous fall in consumer sales at its retail locations.
This poor performance in the shops was largely counterbalanced by a much more resilient showing from the company's veterinary division. The vet business managed to lift its sales by a respectable 6.7 per cent, providing a crucial buffer for the overall group figures.
An Urgent Revival Plan and Major Cost-Cutting
In response to the alarming results, interim executive chairman Ian Burke outlined what he described as an "urgent and necessary" retail revival strategy. The plan is focused on four key pillars: product, price, execution, and cost.
A central component of this strategy involves aggressive cost-cutting initiatives. The company is now targeting a reduction in overheads by approximately £20 million to help stabilise its finances and return the retail arm to profitability.
Outlook and Maintained Expectations
Despite the current turmoil, Pets at Home has confirmed it is maintaining its annual profit expectations. However, it is crucial to note that these expectations were already lowered recently, indicating a cautious and sober outlook for the remainder of the financial year.
The success of the newly launched revival plan, particularly its deep cost-saving measures, will be critical in determining whether the UK retailer can navigate through this challenging period and secure its long-term future on the high street.
