Profit crash at Pets at Home

Together with its joint venture partners (JVPs), Pets at Home plans to buy back and consolidate up to 55 practices from the 471-strong Vet Group. This will cost the company £49 mio by 2020. Around 25 of these will be operated as company-managed practices, whilst closure of the remaining practices is under consideration. Pets at Home points out that an increasingly tight supply of veterinarians in the UK is putting upward pressure on salaries. This creates cost pressure in practices and constrains their growth. Pets at Home aims to support them with more funding, eroding its cash profit and returns. In the first six months of the financial year, non-underlying exceptional charges of £29.9 mio relating to loans provided to veterinary practices were shown.
In spite of this profit crash, the veterinary business is expected to play an important role at Pets at Home in the future, although it will grow rather more slowly than in the past. In the last five years, Pets at Home has opened over 250 new practices with its JVPs. During the financial year the practice rollout is expected to be up to 20 new openings, according to Pets at Home. Following this year, the rollout will be up to 10 practices per year, working towards a new rollout target of up to 700 practices across the UK. 

In the first half-year of fiscal 2019, Pets at Home increased its sales by 6.7 per cent to £499.3 mio. While the sales of the 451 pet stores rose by 6 per cent (like for like: 4.7 per cent) to £433.7 mio, the vet group realised growth of 12.3 per cent to £55.6 mio (like for like: 11.9 per cent). The number of veterinary practices was increased from 447 in the first six months of the previous year to 471. 

"My vision is to develop a complete pet care company, uniting our retail and vet businesses," states CEO Peter Pritchard. When presenting its half-yearly figures, Pets at Home cited a raft of measures encompassing all parts of the company. The business is to be more strongly digitalised in the future, linked to Pets at Home's intention of further consolidating its leading position in online retailing. Customer data is to be more strongly integrated and used more extensively to deliver more personalised offers for customers. 

Another key goal chain is to maintain competitive…