Pets At Home shares slide on weaker sales growth

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Shares in Pets at Home fell 8 per cent on Friday morning after the retailer reported weaker than expected sales growth in some areas, despite store openings and a robust performance from pet services.

The retailer and animal services group reported first-half like-for-like sales growth of 1.8 per cent compared with 4.2 per cent last year.

Services outperformed merchandise sales on a like-for-like basis, with revenues for treatments including so-called “pawdicures” — the animal version of pedicures — and nutritional advice rising 10.5 per cent, up from 10.2 per cent last year.

Merchandise like-for-like sales growth was 1 per cent, compared with 3.7 per cent last year.

The share fall to 286p was the sharpest since the company floated last year.

In the six months to October 8, Pets at Home has opened eight stores — including two premium Barkers branded stores for “cultured canines”.

It plans to open a further 130-plus stores by 2016 as UK consumers show they are willing to spend on pampering their pets.

According to Pets at Home, like-for-like sales figures were hit by unusually strong demand last year for anti-tic and anti-flea treatments because of the weather, which distorted sales of health and hygiene products.

“Whilst trading in parts of the business has been weaker than expected, the core strategic drivers are performing well, and in order to support their growth we continue to invest in our colleagues and seamless shopping experience,” said Nick Wood, chief executive of Pets at Home.

“As we highlighted previously, profit growth will be weighted to the second half, as the strong health and hygiene comparatives ease. Our full-year profit outlook is broadly in line with market expectations.”

Mike van Dulken, head of research at Accendo Markets said there was “persistent weakness” in Pets at Home’s health and hygiene products and warned of “potential for a full-year miss” in profits if the business area did not improve in the second half.

Before Friday’s drop, Pets at Home shares had risen 86 per cent in the past 12 months as profits rose sharply, almost quadrupling to £87m in the year to March.

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