Pets at Home Group PLC (LON:PETS) has warned its half-year pre-tax profit will be “materially below” last year as sales have dwindled after an early coronavirus lockdown spike, while the retailers' operating costs remain high.
Following an initial spike when consumers stockpiled at the beginning of the lockdown, turnover has taken a hit due to social distancing measures and restrictions on non-essential items, with sales focusing on food, the group said.
READ: Pets at Home profits to top expectations as coronavirus outbreak drives up demand
It noted that online sales have not offset the losses from reduced levels in stores, impacting profits, margins and free cash flow, alongside a £5mln extra charge to enhance safety measures.
The pet products seller said it is too early to predict how consumer behaviour will evolve though it remains confident in the long-term sustainability of its business.
“While the current crisis is affecting consumer behaviour across the UK, our pet population is unchanged, pets remain an important part of our lives - possibly even more so as a result of our present circumstances - and still need to be fed, loved and cared for,” the company said in its results statement.
In the year to March 26, 20230, the FTSE 250-listed firm's like-for-like (LFL) revenue advanced by 9% to £1bn, with pre-tax profit up 45% to £85mln, while cash at the period-end was £79mln.
With a final dividend of 5p per share to be paid in July, the total dividend is set to be 7.5p, same as last year.
"We estimate that LFL sales in the last seven weeks have been down about 20%, although the more recent trends have been nearer 5-10% down," analysts at Peel Hunt commented.
"The underlying picture is a good one here: customer numbers are booming and so is their loyalty, so, virus notwithstanding, this is a good update showing a progressive company executing well."
Shares dropped 11% to 203.4p on Thursday morning.
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