Pet retailer Pets at Home has reported an 80.5% drop in pre-tax profits from £40.8m to £8m in its financial results for the 28 weeks from 30 March to 11 October 2018.
The company attributed its performance to “increasing cost pressures” faced by its veterinary business. The company said it was considering the closure of vet practices in 30 locations as the company believed they may not be “viable over the longer term”. However, Pets at Home said it planned to open 20 new practices in 2019.
It will also offer to buy some 55 practices back from joint venture partners and operate 25 of them as company managed practices. The company expects this to result in total non-underlying income statement costs of up to £49m and non-underlying cash costs of up to £27m.
The group’s revenue increased by 6.7% from £468m to £499.3m when compared with the same period last year. It’s retail revenue saw a 6% growth from £418.5m to £443.7m while its vet group revenue grew from £49.5m to £55.6m – rising 12.3%.
Peter Pritchard, group chief executive officer, said: ” Pets at Home is a healthy business and customers are loving what we do; responding to our price repositioning, investment in digital and the amazing service delivered by our vet partners.
“Reviewing our vet group has been a priority. I recognise we have grown at pace and more recently, have seen the pressure that rising costs and our fees are placing on this young business. We will need to recalibrate the business to deliver more measured growth, whilst maintaining our plan to generate significant cash profits.”
He added: “We are focused on maximising our unique assets and delivering a plan for sustainable cashflow and profit growth. Given the success of the changes we have made in retail, I’m confident we can do this.”