PETS Pets At Home Group Plc

TIDMPETS

RNS Number : 3217O

Pets At Home Group Plc

31 January 2023

FOR IMMEDIATE RELEASE, 31 JANUARY 2023

Pets at Home Group Plc: Q3 FY23 Trading Statement

For the 12 week period to 5 January 2023

FY PBT guidance raised after record Q3 consumer revenues

Financial Highlights

-- Consumer revenue(1) up 9% yoy with growth underpinned by a record number of consumers and pleasing volume growth. Consumer revenues(1) up over 30% vs pre-pandemic.

-- Group revenue up 8.8% to GBP347.5m, with growth remaining ahead of our medium term ambition. Group like-for-like(2) (LFL) revenue up 8.3%, accelerating from Q2.

o Vet Group revenue increased by 18.1%, with LFL(2) revenue up 18.0%. Across our general practices we recently broke the GBP10m weekly sales barrier for the first time.

o Retail revenue increased by 8.0%, with LFL(2) revenue up 7.6%, including a record trading day of over GBP8m. All categories were in growth through the quarter and we delivered further progress in our relative price competitiveness.

-- Resilient gross margin performance, in line with management expectations, and a strong grip on operating costs supported good profit and cash conversion across the business.

Outlook

-- Robust trading momentum has continued into Q4, and with 8 weeks of the year left to trade, we now expect FY23 Group underlying PBT(3) towards the upper end of the current consensus range of GBP126-136m, ahead of previous guidance of cGBP131m.

   --   Our balance sheet remains robust and we expect to finish the year in a net cash(4) position. 
   --   Looking ahead to FY24, 

o We have clarity over the move in National Living Wage which at an increase of 9.6% is in line with our expectations.

o Our USD requirements are now c70% hedged at an average rate of $1.18 (FY23 fully hedged at $1.34).

o Freight container rates continue to move favourably.

o We continue to closely monitor the situation on energy.

Strategic Progress

   --   Sustained momentum across key strategic KPIs and consumer acquisition metrics; 

o Sign ups to our Puppy and Kitten Club continued at pace, averaging over 23,000 per week, three-fold higher than pre-pandemic, further boosting our embedded lifetime value opportunity.

o New client registrations across our veterinary general practices remained strong, averaging 8,000 per week, growing our active client base to 1.7m.

o The number of active VIPs increased 8% YoY to 7.6m, with those engaging across more than one channel representing 27% of VIPs.

o The number of subscription plans(5) across the Group grew 9% YoY to 1.6m, now generating over GBP135m in annualised recurring consumer revenue(1) .

-- Continued progress in the development of our digital platform, with Q3 seeing the launch of an enhanced mobile app bringing together VIP and shopping in one easy to use experience.

-- Development of our new purpose-built distribution facility remains on track to become operational by summer 2023, with the build stage now concluded and first inbound deliveries complete.

   --   Launched new trial of the capability to offer customers nutrition subscriptions in-store. 

-- Introduced a new digital tool in our vet group to enable quick and easy appointment booking, payment, and communication between practice and client, removing friction from the consumer experience.

Lyssa McGowan, Chief Executive Officer, commented:

We delivered a really pleasing Q3 with acceleration in sales momentum across the platform. Importantly, the quality of our growth remains strong as we continue to grow volumes and attract new consumers through offering compelling value and service, in what remains a challenging inflationary environment.

It was particularly pleasing to see our accessories category return to growth, supported by the strong performance in our Christmas range, demonstrating that consumers still want to treat their beloved pets in these challenging times. Our Vet Group continued to grow its client base, adding 8,000 new clients a week in Q3, with annualised average practice revenues now reaching GBP1.1m.

I am also delighted to announce the appointment of Kathryn Imrie as our new Chief Consumer Officer, a key role as we further integrate our consumer offering. Kathryn will bring a range of critical skills and external expertise into the business. This completes the recent changes to our Executive team and marks a step-change in our journey to build a consumer-centric, omnichannel, pet care platform.

Creating a better world for pets and the people that love them lies at the heart of our strategy, and I am incredibly proud that our annual Christmas fundraiser, Santa Paws, raised an incredible GBP2.1m for charities.

Conference Call

A conference call for analysts and investors will be held at 9am today. To join the call in listen-only mode, please click on the following link (https://stream.brrmedia.co.uk/broadcast/63b535cbd908a85f58e0d1d0). Those wishing to participate in the Q&A session should email petsathome-maitland@h-advisors.global for details. A recording will be available at http://investors.petsathome .

Strategic Key Performance Indicators

 
                                          Q3 YTD    Q3 YTD 
  Measure                                   FY23      FY22    YoY change 
 Number of active VIPs(6) (m)              7.6m      7.1m        7.8% 
---------------------------------------                      ----------- 
 Consumer revenue(1) from services(7) 
  (GBPm)                                  437.7m    402.8m       8.7% 
                                           32.2%     31.9%       32bps 
---------------------------------------                      ----------- 
 VIP consumer revenue(1,8) (GBPm)         1,186.8   1,053.2     12.7% 
---------------------------------------  --------  --------  ----------- 
 Consumer revenue(1) per FTE colleague 
  (GBPk)                                   171.6     154.9      10.7% 
---------------------------------------  --------  --------  ----------- 
 

1. Consumer revenue includes total revenue across the Group including consumer sales made by Joint Venture vet practices, and therefore differs to the fee income recognised within Vet Group revenue.

2. Like-for-like revenue comprises total revenue in a financial period compared to revenue achieved in a prior period, for stores, omnichannel operations, grooming salons, and vet practices that have been trading for 52 weeks or more.

3. Underlying profit before tax (PBT) is based on pretax profit before the impact of certain costs or incomes that derive from events or transactions that fall outside the normal activities of the Group and are excluded by virtue of their size and nonrecurring nature, in order to reflect management's view of the performance of the Group. Certain pre-opening costs associated wth our new distribution centre are excluded from underlying PBT.

   4.     Net cash is defined as cash and cash equivalents less loans and borrowings. 

5. Total number of plans across Vet Group health plans, omnichannel subscription platforms Easy Repeat and Subscribe & Save.

6. Number of VIP loyalty club members who transacted across the group in the last 52 weeks from end of the reporting period.

7. Defined as consumer sales made by JV vet practices, company managed vet practices, grooming services, subscriptions, pet sales and pet insurance commissions.

   8.     VIP consumer revenue is shown on a rolling 12 month basis rather than a year-to-date basis. 

Our next scheduled update will be our FY23 preliminary results announcement on 25 May 2023.

 
 Investor relations Enquiries 
 Pets at Home Group Plc: 
 Andrew Porteous, Director of Investor Relations    +44 (0) 7740 361 849 
 Chris Ridgway, Head of Investor Relations          +44 (0) 7788 783 925 
 
 Media Enquiries 
 Pets at Home Group Plc: 
 Natalie Cullington, Head of Communications         +44 (0) 7974 594 701 
 
 H/Advisors Maitland: 
 Clinton Manning                                    +44 (0) 7711 972 662 
 Joanna Davidson                                    +44 (0) 7827 254 567 
 

About Pets at Home

Pets at Home Group Plc is the UK's leading pet care business, providing pets and their owners with the very best advice, products and care. Pet products are available online or from our 457 stores, many of which also have vet practices and grooming salons. The Group also operates a leading small animal veterinary business, with 444 veterinary General Practices located both in our stores and in standalone locations. For more information visit: http://investors.petsathome.com/

Disclaimer

This trading statement does not constitute an invitation to underwrite, subscribe for, or otherwise acquire or dispose of any Pets at Home Group Plc shares or other securities nor should it form the basis of or be relied on in connection with any contract or commitment whatsoever. It does not constitute a recommendation regarding any securities. Past performance, including the price at which the Company's securities have been bought or sold in the past, is no guide to future performance and persons needing advice should consult an independent financial adviser. Certain statements in this trading statement constitute forward-looking statements. Any statement in this document that is not a statement of historical fact including, without limitation, those regarding the Company's future plans and expectations, operations, financial performance, financial condition and business is a forward-looking statement. Such forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially. These risks and uncertainties include, among other factors, changing economic, financial, business or other market conditions. These and other factors could adversely affect the outcome and financial effects of the plans and events described in this statement. As a result you are cautioned not to place reliance on such forward-looking statements. Nothing in this statement should be construed as a profit forecast.

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