Pets at Home shares dip despite sales growth

<p>Drop in share price was sharpest since the company floated in 2014.</p>

Pets at Home saw shares drop eight per cent on Friday morning (October 30th), following a report of weaker-than-expected sales growth in some areas. This was despite a number of new store openings and strong performance from its pet services offering.

Like-for-like sales during the first half saw growth of 1.8 per cent compared with last year's 4.2 per cent. Merchandise for the company was outperformed by services. Treatments like "pawdicures" – a pedicure for pets – and nutritional advice saw revenues go up 10.5 per cent. Like-for-like sales for merchandise, however, was one per cent compared to 3.7 per cent during the same period last year.

Commenting on the results, Nick Wood, chief executive of Pets at Home, said: "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."

After the results were reported, shares fell to 286 pence – the steepest drop since the company floated in 2014.

Before the drop on Friday, Pets at Home had seen shares rise 86 per cent in the past 12 months, and they rose sharply - by nearly four times – to £87 million in the year to March.

Full year profit "in line with market expectations"

During the six months to October 8th, the company has opened eight new stores. Two of those were Barkers shops, the company's premium brand for "cultured canines".

Pets at Home says it plans to open more than 130 stores by 2016, as UK consumers have demonstrated their willingness to spend money on their pets.

The company believes that like-for-like sales figures were hit by unusually strong demand last year for anti-flea and tick treatments, due to the weather. This distorted sales of health and hygiene products.

"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," Mr Wood said.

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