Pets at Home Stock Plunges as Retail Sales Remain Subdued

Actions of the Mascotas en Casa Group plummeted on Wednesday after the retailer warned of an “unusually subdued” pet retail market.

Britain’s biggest pet supplies company said slowing growth rates in the pet retail industry will likely “persist for the rest of this year” due to cautious consumer behaviour.

As a result, the Cheshire-based company, which runs around 457 pet care centers and 444 veterinary surgeries, anticipates its underlying pre-tax profits will rise “modestly” this financial year.

Shares in Pets at Home fell 14.2 per cent to 237.8p in early afternoon trading, making it the biggest faller on the FTSE 250 index.

Total revenue rose just 1.9 per cent to £789.1 million in the 28 weeks ending October 10, while retail sales stabilized at £696.3 million.

However, its veterinary division saw sales rise by 18.6 per cent to £92.8m thanks to a healthy rise in subscriptions, visits and average transaction values.

The number of active Pets Club members rose 3 per cent to 8.1 million, while new Vets Group pet registrations averaged 18,000 weekly registrations.

Combined with lower operating costs, this helped boost Pets at Home’s underlying pre-tax profits by 14.1 per cent to £54.5m.

Lyssa McGowan, chief executive of Pets at Home, said: “We are operating in an unusually subdued pet retail market, which we now expect to continue into the second half.”

“We are confident that this will be temporary and that growth will return to historical norms with no change to the attractive long-term prospects for the UK pet care market.”

However, Pets at Home warned that chancellor Rachel Reeves’ recent budget announcements on the national living wage and national insurance would add £18 million to its costs from the next financial year.

From April 2025, the minimum hourly wage for workers aged 21 and over will rise by 6.7 per cent to £12.21. The minimum wage for 18 to 20-year-olds will also rise by 16.3 per cent, to £10 an hour.

At the same time, employer contributions to NI will increase by 1.2 percentage points to 15 per cent, while the threshold at which NI is applied to employees’ income is decreasing from £9,100 to £5,000.

“We will continue to proactively mitigate these impacts wherever possible, maintaining tight control on costs as we have done for many years,” Pets at Home told investors.

The company’s trading update comes as the Competition and Markets Authority carries out a wide-ranging investigation into the veterinary services industry.

The investigation began following concerns that consumers may be paying more for medications or prescriptions and lack sufficient information to help them choose the best veterinary practice or treatment appropriate for their needs.

Additionally, the CMA said there could be too much market concentration, partly due to consolidation in the sector over the past decade.

Six companies – CVS, IVC, Linnaeus, Medivet, Pets at Home and VetPartners – have bought around 1,500 of Britain’s 5,000 veterinary practices, according to the CMA.

Dan Coatsworth, investment analyst at AJ Bell, said: “Pets at Home has expressed confidence that its growth strategy in the veterinary space will not be affected, but there is a risk that, as an email that has given it the back to an aggressive dog, The company faces an unexpected blow from the competition authorities.’