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Pets at Home says full-year underlying profit to remain flat

The strong performance seen in the second quarter has continued into the third quarter but the interim dividend is the same as 2019

Pets at Home Group PLC - Pets at Home says full-year underlying profit to remain flat

Pets at Home Group PLC (LON:PETS) said full-year underlying pre-tax profit is expected to be in line with the previous period, so around £93mln.

The pets products retailer said the strong performance seen in the second quarter has continued into the third quarter and it is taking market share across all channels.

READ: Pets at Home raises profit expectations after strong summer

The firm is deemed an essential retailer and so it is allowed to operate during lockdowns, while it also serves customers online.

Its grooming and vet services have also been in demand, Puppy and Kitten Club members, which usually spend a fifth more than normal customers, grew 25%.

However, the firm is maintaining the interim dividend at 2.5p, same as last year.

In the 28 weeks to October 8, revenue was up 5% to £574mln but underlying pre-tax profit declined 5% to £39mln due to higher costs to respect safety measures.

The extra one-off expenses brought by COVID-19 totalled £8mln, including £1.8mln for personal protective equipment, cleaning and sanitisation and £1.1mln for pet welfare.

The FTSE 250 firm paid a one-off bonus of £1.9mln to frontline staff and created a £1mln Colleague Hardship Fund for those who may have experienced financial difficulties, alongside another £1mln allocated to charity.

Net debt, comprising cash balances and undrawn facilities, was £297mln at period-end.

“Pet ownership has soared as people have been confined to their homes and have had more time to welcome new additions to the household,” said Susannah Streeter, analyst at Hargreaves Lansdown.

“Profit has been held back to some extent because [Pets at Home] is selling a lot more lower margin products like food and Covid costs have also made a significant dent… It’s maintaining an interim dividend per share of 2.5p  which may also raise a few eyebrows, given it’s also benefited from business rates relief.”

Shares lost 10% to 377.6p on Tuesday at the opening bell.

Quick facts: Pets at Home Group PLC

Price: 399.2 GBX

LSE:PETS
Market: LSE
Market Cap: £2 billion
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