Shares in Pets at Home Group PLC (LSE:PETS) rose 6% to 195.8p after the retailer and vet chain reported an acceleration in sales growth at its shops in the new financial year as the pet care retailer backed market profit expectations for 2027 and rejigged its shareholder returns policy.
A "rebased" shareholder returns policy sees the dividend cut to 7.4p from 13p, with an increasing emphasis on share buybacks, starting with a £50 million programme over the next 12 months.
The FTSE 250-listed group said it was comfortable with analyst consensus forecasts for underlying pre-tax profit of £98 million for the 2027 financial year after reporting annual results largely in line with guidance issued in March.
Retail sales growth had continued to improve against tougher comparatives, with the company reporting “mid-single digit” sales growth so far in the new year alongside faster volume growth.
The retailer said its turnaround plan was beginning to deliver results after price cuts and operational improvements helped return Retail sales growth to positive territory in the second half.
For the past year to March 2026, underlying pre-tax profit fell 30.2% to £92.8 million, as retail underlying profit dropped 57.8% to £30.8 million, both in line with guidance given at the pre-close update.
Underlying profit from its veterinary operations rose 10.4% to £83.8 million, supported by higher average transaction values and growth in care plans.
The company said it remained on track to launch its pet insurance business in 2026, with FCA approval received.
New chief executive James Bailey said the business was encouraged by “the improvement in our sales growth and volume trends”.
Having started in March, the former Waitrose managing director said he has spent his early weeks "immersing myself in the business" and this time "has increased my conviction on the opportunity to create value for customers, colleagues and investors".
He added: "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."
Shore Capital has highlighted a growing divergence within Pets at Home, the UK's largest specialist pet retailer, arguing that the higher-margin veterinary division is being undervalued by a market focused on weakness in the retail business.
It noted some encouraging signs of a retail turnaround in the second half, following a programme of new product launches, significant price investment and improved store execution that produced an acceleration in volume growth and a return to positive sales.
The veterinary business continued to expand, with eight new practices opened during the year and a similar pace planned for the current financial year, alongside 17 site extensions completed and a comparable number in the pipeline.
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