Pets at Home Group PLC (LON:PETS) saw its shares jump today as the pet supplies firm reported third quarter like-for-like revenue growth of 7.2% and said all its financial guidance, including gross margin expectations, is unchanged.
In a trading update for the 12 week period to 4 January 2018, the FTSE 250 listed firm said group revenue grew by 9.6% to £223.3mln, with Merchandise revenue up 9.0% to £193.4mln, and Services revenue growth of 13.6% to £29.9mln.
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The company said its Merchandise business saw like-for-like revenue growth of 6.8% in the third quarter, with good performance in-store sales, as well as from omnichannel initiatives - Order In-Store and subscription.
It added that Services like-for-like revenue rose 10.1% in the period, reflecting strong growth in first opinion and specialist referral vet services.
The group said new checkout process launched on its mobile website delivered significantly improved online conversion and customer experience.
The firm opened two Pets at Home superstores, two Vets4Pets practices and five Groom Room salons in the period, and is on track to deliver full year opening targets of around 10 superstores, 40-50 vet practices and 20-30 grooming salons for the full year.
READ: Pets at Home's shares lay down after KKR halves its stake
Ian Kellett, Pets at Homes’ Group Chief Executive Officer – who is due to leave the firm this May - commented: "In the year since we launched our lower pricing initiatives we have seen a really strong customer response to the investments we have made.
“At the same time, we continued to deliver strong growth in our veterinary business across both first opinion practices and specialist referral centres.”
In late afternoon trading, Pets at Home shares were up 6.9% at 194.5p.
"Top line growth firmly back in the black"
George Salmon, equity analyst at Hargreaves Lansdown: “After reporting disappointing sales this time last year, it’s good to see Pets’ top line growth firmly back in the black.
“It shouldn’t be forgotten sales have been boosted by the decision to cut prices, meaning the group is taking the hit on margins in the core pets merchandise division. However, the opportunity to grow its array of vet services and grooming salons is dependent on footfall in the core business rising, so it’s easy to see why keeping the customers coming in took priority.”
The analysts added: “With like-for-like sales in the pet pampering services division growing at double digit rates, these results go some way to vindicating the strategy. If Pets can keep this going, these profits could more than offset the declining margins in-store.”
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