Pets at Home sees modest annual profit growth as demand woes persist

(Reuters) -Pets at Home Group forecast a modest growth in its annual underlying profit before tax on Wednesday, as inflationary pressures and lower purchasing power dented demand for discretionary pet accessories and services.

Inflation-weary pet owners have become more conservative with their spending on items such as toys for their furry companions, limiting Pets at Home’s performance.

“We are operating in an unusually subdued pet retail market, which we now expect to continue through the second half,” the company said, adding that it was confident that the slowdown will be temporary.

The group, which also offers grooming and veterinary services, said its underlying profit before tax was 54.5 million pounds ($68.60 million) for the 28 weeks ended Oct. 10, up from 47.8 million pounds a year earlier. Lower profits in the firm’s retail business offset significant earnings at its Vet group.

We now plan for current rates of market growth to persist through the remainder of this year, lower than initially planned.

The company said it expects underlying PBT for FY25 to grow modestly from the 132 million pounds it logged last year.

Analysts on average had forecast an annual profit of about 144 million pounds, with a range of 134 million pounds to 151 million pounds, according to a company-compiled consensus.

Still, for the 28-week period ending Oct. 10, Pets at Home posted modest revenue growth. Total group revenue grew 1.9%, while like-for-like revenue was up 1.6% .

Beyond challenges due to consumers keeping a tight lid on spending, UK’s veterinary sector faces regulatory scrutiny over pricing and competition, after the Competition and Markets Authority opened an investigation into the sector.

($1 = 0.7945 pounds)

(Reporting by Chandini Monnappa in Bengaluru; Editing by Rashmi Aich)