UK pet care leader Pets at Home (LON:PETS) saw profits plunge on broadly flat revenue in FY26 and slashed the dividend by more than 40% to conserve cash. So why did shares in the pet food-to-vet services seller rally on such dog-eared results?
Well, new CEO James Bailey hailed progress with the retailer’s turnaround strategy. This has already stoked a return to growth for the retail business in Q4.
The Cheshire-based firm said retail sales growth has ‘accelerated further’ in FY27-to-date despite tougher comparatives. And Pets at Home expects a further year of profit growth from its vets business.
The company remains comfortable with consensus expectations for underlying pre-tax profits of £98 million.
Profits under pressure
Against a backdrop of soaring costs and weak consumer confidence, Pets at Home’s results for the year to March 2026 showed a 0.8% drop in group revenue to £1.47 billion. Underlying pre-tax profits dropped 30.2% to £92.8 million.
Retail revenue softened 1% to £1.29 billion in FY26.
However, the vet division continued to outperform, with consumer revenue up 5% to £688.1 million, supported by strong care plan sign-ups and higher average transaction values.
Retail revival
Encouragingly, Pets at Home’s retail sales returned to growth in Q4 following the launch of a recovery strategy. As ex-Waitrose boss Bailey explained: ‘Material progress has been made over the past six months stabilising the retail business, delivering improved satisfaction and better availability.
‘We have the opportunity now to build momentum through profitable volume led growth in retail while continuing to execute the proven growth levers of our vet business and launch our insurance offering.’
Pets at Home also welcomed the conclusion of the Competition and Markets Authority’s (CMA) veterinary services market investigation. According to the FTSE 250 company, this probe ‘recognised that our practices offer competitive prices and strong customer outcomes while operating a differentiated joint venture model’.
Shares in Pets at Home are down almost 60% over five years and 25% on a one-year view. We think this weakness offers a good entry point for patient investors prepared to wait for recovery.
Admittedly, pet owners have been cutting back on discretionary items such as pet accessories as cost-of-living pressures bite. But the retailer remains the clear leader in a resilient pet care market which benefits from trends towards premiumisation and humanisation.
Pets at Home is also under new leadership. And the company looks leaner and meaner, having taken out £20 million in costs. We also think there’s more to come from the retail turnaround.
Read the press release here: https://www.petsathomeplc.com/investors/
You might also like these stories:
