Pets at Home has demonstrated a notable improvement in its retail sales performance during the crucial third quarter, following a strategic decision to implement significant price reductions across its product range. The pet care retailer reported that consumer revenues from its retail stores declined by 1.1% in the quarter ending January 1, 2026, marking a substantial sequential improvement from the 2.3% drop recorded in the first half of the financial year.
Strategic Price Reductions Drive Volume Growth
The company revealed it had reduced prices by an average of 12% on more than 1,000 products as part of what it describes as an "urgent and necessary" turnaround plan for its retail operations. This pricing strategy appears to be yielding positive results, with the group reporting increased sales volumes across both food and accessory categories during the important Christmas trading period.
Veterinary Division Provides Crucial Support
While the retail division continues to face challenges, Pets at Home's veterinary business has maintained its strong performance trajectory, recording a 5% increase in sales during the quarter. This division continues to provide essential support to the overall business, helping to offset the ongoing difficulties in the retail environment.
Overall group revenues experienced a modest 1% decline to £358 million for the quarter, yet investors responded positively to the improved retail performance, with shares rising 4% in Wednesday morning trading following the announcement.
Leadership Changes and Future Strategy
The company is undergoing significant leadership changes as it seeks to stabilise its retail operations. Former Waitrose managing director James Bailey has been appointed as the incoming chief executive, scheduled to assume the role on March 30, following the abrupt departure of previous CEO Lyssa McGowan in September.
Interim executive chairman Ian Burke, who took temporary leadership following Ms McGowan's exit, commented: "I'm pleased to report continued strong performance in our vet business and sequential improvement in retail, as we continue to implement our retail turnaround plan."
He further explained: "One of our key early actions as part of this plan included investing in our customer offer, reducing the price of over 1,000 products by an average of 12%."
Focus on Turnaround Priorities
Looking ahead, Mr Burke outlined the company's strategic focus: "With a new chief executive and chief financial officer joining in spring, our focus for the remainder of the year is on building momentum behind our four turnaround plan priorities of price, product, cost and execution, to deliver our 2025-26 plan and to return our retail business to sustainable sales and profit growth."
Industry Context and Regulatory Developments
The Pets at Home update comes amid significant regulatory developments in the veterinary sector. The Government has recently outlined plans to overhaul the veterinary industry, including requirements for practices to publish price lists for common treatments and disclose whether they operate independently or as part of larger chains.
These proposed amendments to the Veterinary Surgeons Act follow Competition and Markets Authority findings that veterinary fees have increased at almost twice the rate of inflation, with concerns that pet owners often lack sufficient information about treatment options and associated costs.
Market Analysis and Outlook
Garry White, chief investment commentator at Charles Stanley, offered his perspective on the company's position: "Pets at Home is holding its ground in a challenging retail environment, with its vets and subscription businesses continuing to cushion the impact of ongoing retail softness."
He added a note of caution regarding future prospects: "The retail operation is likely to remain under pressure until consumer confidence improves, and the timing of this remains difficult to judge."
In a related development, veterinary chain CVS expressed support for the Government's proposed regulatory changes, stating that such measures would "help strengthen consumer confidence in the profession."
The company's performance update highlights both the ongoing challenges in the retail sector and the strategic measures being implemented to address them, while demonstrating the resilience provided by its diversified business model across retail and veterinary services.
