Pets at Home boss Ian Burke has unveiled a turnaround plan for its flagging retail business that aims to cut prices and improve its product offering.
The interim executive chair, who took the helm in September, said “urgent and necessary action” was needed to return the retail business to growth.
It comes after the division delivered an underlying pre-tax profit of £3.5m in the 28 weeks to October 9, down 84% on the £22m profit last year.
Retail sales dipped 2.3% to £679.9m in the half. Pets at Home reported that the second-quarter performance sequentially improved over the first as strong online sales partially offset a weaker store performance.
Burke said: “Stepping into the role as interim CEO 10 weeks ago, I set out with a clear agenda to establish a firm grip on the issues facing our retail business, whilst maintaining the positive results we’re seeing in areas such as vets.
“For over 30 years, Pets at Home has been a business with a clear purpose, an established market and loyal customer base, but it’s clear that urgent and necessary action is needed to return the retail business to growth to meet both our own expectations and those of our investors.”
Pets at Home said it believes the two main causes of its retail sales shortfall are in its advanced nutrition and accessories product ranges.
The retailer said it was overexposed to legacy ranges in the advanced nutrition market and blamed “not having the right products at the right price points, with the right execution” for underperforming in the accessories category.
As a result, the company said it would “reset and revitalise” its pet food category and improve its own-brand product innovation and partnerships with third-party brands.
It will also continue to reduce prices to improve its value proposition. The retailer recently invested £4m in cutting the prices of over 1,000 products by an average of 12%.
Pets at Home admitted its execution of new initiatives “has not been good enough” and shared that it was focused on improving commercial execution through simplified strategies and better forward planning.
Burke added: “We are returning to our retailing roots to stabilise and rebuild momentum in our retail business, and to lay the foundations for a new CEO in due course.”
Across the wider business, the retailer reiterated its pre-tax profit guidance for the year of £90m to £100m.
Group underlying pre-tax profit fell 33.5% to £36.2m in the half and revenues slipped 1.3% to £778.3m.
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