Omni-channel proposition delivers solid growth for Pets at Home, says GlobalData

Following today’s release of Pets at Home H1 figures for FY2019/20, Hannah Richards, retail analyst at GlobalData, a leading data and analytics company, comments: ‘‘Following the restructuring of its veterinary arm, which saw the Pets at Home Group buy out 57 of its joint ventures run with independent practices and close a further 36, underlying profit before tax (including IFRS16) has recovered from H1 2018/19, up 10.2% from £37.9m to £41.7m, pleasing investors and sending its share price up 10% this morning.

“Continued commitment to becoming an omni-channel specialist has paid off for the retailer with omni-channel revenue increasing £11.0m as its integrated offer remains an important part of its proposition, with around 60% of digital transactions involving a store-based colleague. Total group revenue rose £47.0m on last year, reaching £546.3m, with retail revenue achieving a 2-year like-for-like of 13% despite tough trading conditions. This success is down to the Group’s successful strategic restructuring, alongside its ability to adapt to changing consumers need through its everyday low prices and its focus on specialist services, cementing its position as a one stop shop for pet care.

“Pets at Home has attributed its success in part to the impact of its VIP loyalty club, with a 22% growth (YoY) in the number of VIP customers who purchase both products and services, with around 16% of all active VIP members now spending across both divisions of the business. The group is further pursuing development of its VIP offer using data amassed from existing members to tailor its marketing approach to individual customers based on their shopping habits. Through personalised and targeted marketing, Pets at Home can encourage cross category shopping and increase discretionary spend. Providing relevant marketing will also instil a sense of value and individuality amongst customers, giving Pets at Home and edge over grocers and discounters unlikely to provide the same level of service in pet care.

“Despite its aims to deliver 50% of sales from pet care services, Pets at Home has a long way to go with minimal sales growth within services this half, with the mix of revenue increasing to 35.4% from 34.5% in H1 2018/19. Steps have been made to drive growth within services such as the expansion of its Easy Repeat range which aims to capture a greater share of customer spend across categories, as well as in-store incentives for staff who refer customers to veterinary health plans.

“The launch of its first pet care store format, which promotes services such as pet care classes and dog washing stations, had positive reactions prompting the extension into a further three stores in H1 2018/19. This is something which should be rolled out further across its portfolio to enable Pets at Home to increase its share of revenue from services further as consumers continue to spend less on products and more on services and experiences.”