Pets at Home PLC (LON:PETS) shares jumped after reporting higher revenue in the first few months of the financial year as price cuts and instore vets lured in more customers.
Revenue rose 8.1% to £277.4mln in the 16 weeks to July 19 with retail revenue up 6.9% and veterinary revenue up 18.4%. On a like-for-like basis, revenues increased 6.1%.
"I am really pleased with our start to the year, particularly as trading across both retail and the vet business has been consistently strong," said chief executive Peter Pritchard.
"There are so many initiatives that are working: great promotions and lower prices, capitalising on the hot weather with our biggest ever summer and cooling product range, the launch of our easy repeat online delivery service, and an excellent 'Best Start in Life' puppy health plan campaign in vet practices."
However, gross margins fell due to the company’s decision to cut prices in response to tough competition from online retailers. It continues to expect its gross margins to fall by 75-125 basis points for the year.
READ: Pets at Home Group shares fall as profits tumble despite revenue rise
Pets and Home also left its guidance for profit and cash flow unchanged.
Pritchard said while the group has made progress with its initiatives to boost demand, the group needs to improve the customer experience in-store and address challenges such as a shortage of veterinary practitioners and the associated cost and cash flow support that is required.
"I know we have the capability to address these challenges whilst continuing to deliver the three-year financial plan we have committed to," he said. "I am confident that we have a really exciting future ahead and am looking forward to sharing this strategy in more detail at our November interim results presentation."
Shares rose 9.1% to 123.4p in morning trading.