Pets At Home expects a “subdued” market for pet products to continue in 2025, as it reported rising costs across the group and pared back profit expectations for the coming year.
The company said it has seen a period of “subdued growth in the pet sector due to a soft UK consumer backdrop” this year.
Meanwhile it also pointed to “normalising levels of new pet ownership” after a boom in people buying animals during the pandemic.
However, pet owners signing up to the brand’s loyalty scheme have reached record numbers amid more available vets and nurses, it said.
Pets at Home sells small animals like rabbits and hamsters and products for pets including dogs and cats through its retail division, and also provides veterinary healthcare and grooming services at centres across the country.
Shares in the company rose 2.2% on Wednesday, but remain about 48% down on their post-pandemic high in 2021.
Underlying profit at its retail business was £72.9 million for the year to March 27, plunging 16.6% compared with the previous year, while revenue fell 1.8%.
Pets At Home’s vet arm, which has grown to more than 440 general practices in shops and as standalone centres, fared better, with profit growing 23.3% year-on-year to £75.9 million.
Chief executive Lyssa McGowan said that side of the company saw “another outstanding year of growth”.
However, she admitted that even there it faced “ongoing uncertainty” from an investigation by the Competition and Markets Authority (CMA).
Earlier this year, the CMA said it could cap prices on medicines, prescriptions and other services like cremations, following a period of soaring prices in the sector.
Prices for treatments have swelled 60% between 2015 and 2023, compared with inflation of 35% for other general services, the CMA has said.
While Pets At Home’s vet arm is considerably smaller in terms of revenue, it is considerably more lucrative than the retail business, making just over half of its profit from that side of the company.
The company said it expects “current market conditions and subdued consumer backdrop” to remain in the next year.
It pointed to profit this year of between £115 million and £125 million, amid growing operating costs, which it said could increase by as much as 5% after rises in inflation, employer taxes and other overheads.
The company said it expects underlying profit in retail to decline again next year.
And while it expected “further progress” in vet profit, it said that is “against the comparative of the exceptional levels of growth seen in the last two years.
Julie Palmer, an analyst at Begbies Traynor, said the results marked “a tough year” for the retailer amid “weakened consumer spending”.
“While the vet business is outperforming the retail side of the business, the CMA’s probe into the sector adds a level of uncertainty and could clip its wings, leaving few bright spots for the company to lean on.”
