Pets at Home Group PLC (LON:PETS) shares soared on Wednesday after the pet supplies retailer performed ahead of expectations in its latest full year despite a profit plunge of nearly 40%.
For the year ended 28 March, the FTSE 250 firm reported a pre-tax profit of £49.6mln, down 37.7% year-on-year, while revenues climbed 6.9% to £961mln and were up 5.7% on a like-for-like (LFL) basis.
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The sharp drop-off in profits was mainly due to £40.4mln in ringfenced funds that the company will use to fund more buyouts of its joint venture vet practices as part of a restructuring plan.
However, underlying pre-tax profits, which did not include the charge, rose 6.1% in the year to £89.7mln as the company’s retail division performed ahead of expectations with LFL growth of 5.1%.
The group’s total dividend for the year was also maintained at 7.5p per share.
In its outlook, the company said it expected the profit growth in its retail arm to continue through its current financial year, although added that the restructuring of its Vets division meant there would be a “slight decline” in its underlying pre-tax profit year-on-year.
Peter Pritchard, the company’s chief executive, said he was confident that the firm would be able to “successfully reposition” its Vet business and that the company was “trading strongly and taking share across the pet market”.
In a note to clients, analysts at Shore Capital highlighted that PETS operated in an “attractive market” with structural growth and was “on the right path”.
The results sent tails wagging across the market, with the shares jumping 9.3% to 161.7p in mid-morning.