Growth in services revenue provided some bite to fiscal first quarter results from Pets at Home Group PLC (LON:PETS).
The specialist retailer of pet-related products and services saw like-for-like (LFL) year-on-year revenue growth of 2.7% in the period from 1 April to 21 July.
The merchandise side’s LFL revenue growth was a toy poodle-sized 2.2% while services saw a Labrador-sized uplift of 7.5% from a year before, albeit against what broker Liberum described as weak prior year comparative figures.
"We are pleased with our positive start to the year, delivered through consistent performance in our core strengths of Advanced Nutrition, vet and grooming services, with a continued underpin from the growth in sales to our VIP members,” said Ian Kellett, the group’s chief executive officer.
The group said its full-year outlook remains in line with market expectations.
Liberum reckons the stock is still a dog.
“We believe the top line is more volatile than we had initially perceived and Services gross margin progression has been slower than expected. Combined with cost investment for long-term growth, this will limit any operating margin expansion until at least FY19E [fiscal 2019],” the broker said.
“If a more cautious consumer environment were to persist, the risks from customers trading down, switching to cheaper online competitors or making marginal purchases, particularly within accessories, at general merchandise discount stores could be significant,” it added.
The shares climbed 1.5% to 242.5p in early trading.