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30 Oct 2015
Investors in Pets at Home (PETS) are having an allergic reaction to today’s H1 trading statement, toppling the shares by 7% from all-time highs just 18-months post IPO. While H1 sales grew 1.8% organically, strength in several business lines was countered by ‘continuing seasonal challenges’ (a.k.a. persistent weakness) in Health & Hygiene and an ‘evolution in mix’ (a.k.a. preference for less profitable lower margin products) in selected grocery and accessories categories.
While Services revenues climbed 10.5%, the dominant Merchandise segment grew only 1.0% and management’s statement that its full year profit outlook is ‘broadly in line with market expectations’ suggests potential for a FY miss should profits fail to be weighted towards H2 via recovery in Health & Hygiene. Shares +16% since IPO and +76% from all-time lows just over 12-months ago.
Mike van Dulken, Head of Research
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