Deutsche Bank has cut its price target on Pets at Home Group PLC (LSE:PETS) to 215p from 275p after the sudden departure of chief executive Lyssa McGowan and a downgrade to profit guidance.
The retailer said it now expects pre-tax profits of £90–100 million for the year, with the midpoint about 17% below market forecasts of £114 million.
The shortfall reflects continued weakness in its retail arm, where like-for-like sales are down 5% so far this year. Online trading has been stronger, with double-digit growth, but not enough to offset subdued store performance.
Deutsche Bank analyst Alison Lygo said that while the second quarter showed some improvement, trading “remains negative” and the group has underperformed relative to expectations of a return to outperformance.
Chair Ian Burke will take on an executive chair role while a successor is found.
Analysts expect management to prioritise product range and the customer proposition to regain ground in a highly competitive market.
After a sharp sell-off on Thursday, the stock bounced back with a 1% gain to 195.21p. Deutsche remains a 'buyer'.