The UK's leading pet care retailer, Pets at Home, has issued a stark warning that urgent and necessary measures are required to rescue its struggling retail operations. This comes as the company revealed a dramatic 33.5% drop in group half-year profits.
A Tale of Two Divisions
The six months to October 9 painted a picture of two contrasting performances within the business. While the veterinary division saw sales rise by 6.7%, the core retail arm suffered a severe downturn. Underlying profits for the retail business plummeted by a staggering 84.1% to just £3.5 million.
This sharp decline in the retail sector dragged down the entire group's performance, with overall underlying pre-tax profit falling to £36.2 million. Consumer sales in retail dropped by 2.3%, with accessories falling 5.9% and food sales down 0.3%.
The Road to Recovery
Interim executive chairman Ian Burke, who stepped in after the sudden departure of CEO Lyssa McGowan in September, is spearheading the response. He stated the group is returning to our retailing roots to stabilise the business.
Mr Burke commented: "I've spent time visiting over 100 pet care centres and engaging with colleagues... resulting in the implementation of a retail turnaround plan with four clear priorities of product, price, execution and cost."
Cost reduction is a central pillar of this new strategy, with the company targeting overhead savings of approximately £20 million. The firm has already begun implementing a leaner store operating model and is examining opportunities in purchasing, store leases, and distribution automation.
Looking Ahead
Despite the challenges, the company maintained its recently revised annual profit forecast of £90 million to £100 million for underlying pre-tax profits. This still represents a significant drop from the £133 million achieved the previous year.
The business confirmed that the search for a new chief executive is progressing, with the current retail turnaround plan aiming to lay strong foundations for their eventual arrival.
