Back on track

The outcome of the financial year exceeded the company's expectations and retail sales returned to profitability sooner than anticipated. "The growth in the pet supplies market remains robust and we are participating in all the key areas, both online and offline," was the message in Pets at Home's press release. The performance is ahead of expectations, the new pet care strategy delivering strong results. The growth of the pet market as a whole remains solid and Pets at Home is taking a share of all key areas, both online and offline.
The underlying veterinary group business is performing well and recalibration by buying out and running, or closing, a small number of joint venture practices remains on track. 48 joint venture practice buy outs have been completed, of which 19 have closed. "We are confident about the year ahead, entering FY20 with good momentum and on a higher revenue and profit base than previously anticipated," says the press release.

Group revenue in FY19 grew by 6.9 per cent to £ 961.0 mio (FY18: £ 898.9 mio) and like-for-like (LFL) revenues grew by 5.7 per cent. Retail revenues grew by 6.2 per cent to £ 854.6 mio (FY18: £ 804.8 mio), including omnichannel revenue growth of 43 per cent to £ 73.5 mio. LFL revenue growth was 5.1 per cent. Food revenues grew by 7.9 per cent to £455.4 mio (FY18: £ 421.9 mio), reflecting good performance in dog Advanced Nutrition (AN) and other premium food lines, as well as dog treats. AN revenue overall grew by 10.6 per cent to £ 210.1 mio (FY18: £189.8 mio). Accessories revenue grew by 3.9 per cent to £ 357.0 mio (FY18: £343.5 mio), with ranges in discretionary categories such as dog collars & leads, dog toys and travel & training proving particularly popular.Veterinary group revenue grew by 13.1 per cent to £ 106.4 mio (FY18: £ 94.1 mio), with LFL growth of 11.2 per cent. Customer sales by joint venture veterinary practices were up 13.3 per cent to £ 309.8 mio (FY18: £ 273.5 mio). This led to the company's fee income increasing by 5.2 per cent to £ 52.6 mio (FY18: £ 50.0 mio), whilst LFL fee income growth in FY19 was 12.2 per cent (FY18: 13.3 per cent).

"During the first half of FY19, it became apparent that operating loans provided to underperforming practices would not be recoverable," the company states. As such, it stopped recognising revenue on services provided to those practices throughout FY19. The impact of this is that fee income of £ 4.1 mio…