Pets at Home Group PLC (LON:PETS) said chief executive Ian Kellett is stepping down to “pursue his own personal business interests” as the company reported a drop in first half profits.
Kellett will leave in May 2018 and will be replaced by Peter Pritchard, the chief executive of the group’s retail division.
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“Ian and Peter will continue to work closely together over the next six months through which there will be an orderly handover process,” said chairman Tony DeNunzio.
“I want to thank Ian for his long tenure at Pets at Home, having successfully led multiple areas of the business in his roles as Chief Financial Officer, within Retail, and as Group CEO.”
First half profits fall
The announcement was made alongside the company’s results for the 28 weeks to October 12, which showed a 11.3% decline in statutory pre-tax profit to £46.0mln, including exceptional costs of £1mln related to the accounting treatment of veterinary specialist referral centres.
Shares fell 9.63% to 162.30p in morning trading.
Group revenue edged up 6.0% to £441.3mln and like-for-like revenue increased 3.9%, accelerating from a 2.5% rise in the first half of last year.
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Total income from joint venture practices rose 16.1% to £28.0mln with specialist referral centres growing revenues at double digit levels. Omnichannel revenue jumped 81% to £24mln, driven by order in-store and subscription plans.
Merchandise trading grew 3.1% on a like-for-like basis following a repositioning of the business.
Outlook in line with market forecasts
The company said the profit outlook for 2018 is in line with market expectations.
“As we see the benefits of our pricing actions, we are accelerating our investment plans and now expect group gross margin dilution of 200-250 bps,” the group said.
“Operating cost growth is now expected at 6-6.5% as we see higher overall sales growth, and the associated costs of delivering a fast growing omnichannel business."
Shore Capital left its rating at 'buy' and target price at 216p, saying: "We continue to like PETs based on the fact is operating as a market leader in a structural growth market with management taking effective action to reinvigorate its proposition to make it relevant. This seems to be working and with the business set to see improving profitability as it matures too we believe there is strong growth potential."