Pets at Home Group PLC (LSE:PETS) shares dropped 11.3% after the retailer and vet chain reported trading in line with expectations but gave weak guidance for the new financial year.
A pre-close trading update from the FTSE 250-listed group revealed a "challenging and volatile UK consumer backdrop" but that fourth-quarter trading in both the Retail and Vets businesses was broadly as expected.
This has led to a re-iteration of guidance for pre-tax profit of £133 million for the year to 27 March 2025, in-line with the City analyst consensus.
For the year to March 2026, a fall in profit is expected to £115-125 million, however.
Management expects the Vets business to see continued revenue and profit growth, but expects weakness from the Retail side of the business against an uncertain consumer backdrop.
Furthermore, it highlighted "external" cost pressure from the minimum wage and National Insurance contribution changes, which are expected to have an £18 million impact, with new packaging regulations adding £2 million and further marketing investment of at least £3 million.
"We plan to make significant savings through material cost reduction and productivity initiatives to deliver no more than a 5% increase in operating costs in FY26," the company said.