Pets at Home has reported a notable improvement in its retail performance, with sales declines easing significantly following a strategic round of aggressive price reductions. The pet care retailer implemented average price cuts of 12% across more than 1,000 product lines, a move that has helped stabilise its struggling retail division during a challenging period for the sector.
Retail Performance Shows Sequential Improvement
The company revealed that retail consumer revenues declined by 1.1% during its third quarter ending January 1st. This represents a substantial improvement compared to the 2.3% decline recorded in the first half of the financial year, indicating that the price reduction strategy is beginning to yield positive results. Throughout the important festive trading period, sales volumes actually increased across both food and accessories categories, suggesting that customers are responding favourably to the more competitive pricing.
Veterinary Business Continues Strong Performance
Meanwhile, the company's veterinary division continues to perform robustly, with turnover advancing by 5% during the same quarter. This segment has been compensating for the weaker retail performance, helping to cushion the overall impact on the business. Total group revenues experienced a modest 1% dip to £358 million during the quarter, reflecting the ongoing challenges in the retail environment.
Leadership Changes and Turnaround Strategy
Interim executive chairman Ian Burke, who stepped into the leadership role following the sudden departure of former chief executive Lyssa McGowan in September, expressed satisfaction with the progress. "I'm pleased to report continued strong performance in our vet business and sequential improvement in retail, as we continue to implement our retail turnaround plan," Mr Burke stated.
He emphasised that one of the key early actions in this plan involved "investing in our customer offer, reducing the price of over 1,000 products by an average of 12%." The company has also made significant leadership changes, appointing former Waitrose managing director James Bailey as its next chief executive, who will assume the position on March 30th.
Focus on Four Key Priorities
Looking ahead, Mr Burke outlined the company's strategic focus for the remainder of the year. "With a new chief executive and chief financial officer joining in spring, our focus for the remainder of the year is on building momentum behind our four turnaround plan priorities of price, product, cost and execution," he explained. The ultimate goal is to "deliver our 2025-26 plan and to return our retail business to sustainable sales and profit growth."
Industry Perspective on Challenging Environment
Garry White, chief investment commentator at Charles Stanley, offered his analysis of the situation. "Pets at Home is holding its ground in a challenging retail environment, with its vets and subscription businesses continuing to cushion the impact of ongoing retail softness," he observed. However, he cautioned that "the retail operation is likely to remain under pressure until consumer confidence improves, and the timing of this remains difficult to judge."
Regulatory Context for Veterinary Sector
The Pets at Home announcement comes against the backdrop of government proposals to reform the veterinary sector. These proposals include requirements for practices to be transparent about treatment options and pricing to boost competition within the industry. Under the proposed amendments to the Veterinary Surgeons Act, veterinary surgeries would be required to publish price lists for routine treatments and disclose whether they operate independently or as part of a larger chain.
This regulatory initiative follows Competition and Markets Authority research which revealed that veterinary charges have increased at nearly double the rate of inflation, with pet owners often receiving insufficient information about treatment costs. Meanwhile, veterinary chain CVS announced its support for the government's proposals, stating that they believe these measures will "help strengthen consumer confidence in the profession."
The Cheshire-based retailer's performance update demonstrates how strategic pricing adjustments, combined with strong performance in service-based divisions, can help navigate difficult retail conditions while awaiting broader improvements in consumer confidence.
