Kellogg’ssales rise supported by its club initiatives, says GlobalData

Following today’s release of Pets at Home’s figures for Q1 FY2022/23; Vish Nesarajan, Retail Analyst at GlobalData, a leading data and analytics company, offers his view: “Pets at Home has kicked off this new financial year in a strong position despite the ongoing cost-of-living-crisis, with total group revenue having risen by 7.1% to £404.7m in Q1 FY2022/23. Indeed, while the pet care specialist will not be immune to rising inflation and the squeeze on consumers’ disposable incomes, it is expected that  the group will be able to maintain this momentum as the year progresses due to initiatives such as its members’ clubs and its veterinary service, with both of these helping to drive customer loyalty. The pet care retailer has also introduced productivity and efficiency initiatives to help it manage these cost pressures, ensuring that. Pets at Home expects to achieve FY2022/23 underlying pre-tax profits of approximately £131m, though this is down -9.0% on the previous financial year.

“Much of the group’s Q1 performance can be attributed to its ability to retain new customers from the previous year, with 1.1m shoppers purchasing from Pets at Home for the first time in FY2021/22. In addition to holding onto new customers, initiatives such as the Puppy and Kitten Club are proving a success with signups averaging 25,000 a week. This strategy of enticing new pet owners to its store will prove beneficial in both the short and long-term as it ensures it is a destination for their pets’ needs throughout their life. These clubs provide customers with personal offers and discounts, driving spend via  its stores and website. It also serves as a tool to encourage repeat spending. Pets at Home has reported growth in its members clubs is three times higher than it was before the pandemic, though this is likely to be largely driven by more consumers buying pets, with the group’s total club members now at 7.3m as of July 2022. A shift towards a hybrid-working model has aided this, with people being able to spend more time with their pets, and with this working model expected to stay in a post-pandemic environment, pet ownership is expected to remain higher than 2019-levels, supporting growth prospects at Pets at Home. 

“Pets at Home’s omnichannel revenue saw a robust l-f-l increase on FY2021/22, up 13.5% against strong comparatives, and this highlights how the group’s investment in its online proposition is paying off. Its improved click & collect that allows customers to order online with instore collection within an hour of placing the order or its two-hour home delivery option appeals to growing demand for q-commerce. The group also plans to create a new digital interface, where customers can access their entire pet care needs, and this £20 million digital investment will drive long-term online growth.

“Its veterinary practice also remained strong, up 8.6% in this quarter, outperforming its retail division, and Pets at Home’s client base has grown to 1.7m this year. Indeed, this fascia of its business is likely to continue to excel over the next few years as it provides positive long-term revenue prospects. With pet owners often treating pets as members of the family, expenses related to their health and wellbeing will continue to be prioritised despite the impact of high inflation on disposable incomes.”