Retailer achieves recession-busting performance and downplays VAT threat as it plans 150 more stores
Pets at Home’s pre-tax profits rocketed 35.6% to £54.2m in the year to March 25, and the retailer is confident next year’s VAT rise will have a minimal impact on performance.
Like-for-likes increased 8.8% and turnover jumped 15.7% to £467.7m. EBITDA increased 20.3% to £84.3m.
The 266-store retailer plans to open “150-plus” further shops, said chief executive Matt Davies. It opened 24 stores in the period and plans 25 in the current year.
Pets at Home, which was bought in January by private equity firm KKR for £955m in the sector’s biggest retail deal in years, has emerged as one of retail’s best success stories despite the recession.
Although Davies remained cautious on the outlook, he said Pets at Home would thrive. “The environment remains very tough,” he said. “For any retailer the next couple of years are going to be a challenge. There’s recognition that people will have less money to spend. Margins are under pressure and thrown into the mix is the increase in VAT.”
He added that the VAT rise would “all-in-all have a very small impact” on Pets at Home, which is a “low-ticket business”.
Davies added: “We’re working hard to reduce prices at the moment and to source more effectively to deliver even better value than ever.”
Davies said: “We have had a very strong year in a tough environment and generated good like-for-like growth, supported by the opening of really strong new stores. We deliver an experience to people, good value and a very authoritative range that changes on a regular basis. Caring for pets is in our DNA.”
Although Davies would not comment on current trading, he said the 10 stores opened since year end are “performing ahead of expectations”.
He said the new ownership has allowed Pets at Home to “make some very long-term decisions and investments”, and that the retailer is “taking time to finalise the strategy”.
Davies added he was “really excited about the pipeline of products” for the current year. Pets at Home plans a “very strong focus on kids and aquatic this year”, including Disney-themed tanks.
He said: “We have traded in tough environments and generated good growth,” adding that “Christmas this year will be bigger and stronger than ever”.
In the year Pets at Home re-launched its website, providing it with a “strong platform to accelerate our development into a fully functional multichannel retailer”.
In March Retail Week revealed Pets at Home hired former Asda president and chief executive Tony DeNunzio as its non-executive chairman to help drive growth under KKR.