The Pets at Home Group PLC (LON: PETS) share price plunged 10.3% despite releasing an upbeat half-year earnings report. In addition, investors reacted negatively to the slightly lower profits posted by the company, despite the CEO's optimistic outlook.
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The pet supplies company generated total revenues of £727.2 million, representing a 7.3% improvement to the revenues banked in a similar period last year. However, the company’s pretax profits fell 9.3% to £59.2 million, compared to the £65.3 million figure reported last year.
Investors were quick to punish the company for its results, despite the CEO, Lyssa McGowan, reassuring markets that the trend of people treating their pets well is not changing. The company saw a massive boom in pet ownership and pampering during the COVID-19 lockdown, a trend many doubted would persist once the restrictions were lifted.
Mcgowan assured the markets that the company’s pretax profits would align with analysts' forecasts of £131 million.
Pets at Home registered growth in all its business areas, including its veterinary practice, which saw an average of 8,000 people sign up weekly. Furthermore, the company’s Puppy and Kitten club kept growing at an average of 29,000 new signups each week, three times higher than in the pre-pandemic period.
The company reiterated its medium-term goal of hitting £2.3 billion in customer revenues annually and confirmed that it was making the necessary investments to achieve this goal. The firm’s new CEO, Lyssa McGowan, is off to a good start given its latest performance, which we hope will continue.
The number of subscription plans across the company grew 11% to 1.6 million, which could generate annual recurring revenues of £135 million. Subscriptions are a critical metric for the firm, given that they provide a predictable revenue stream for the company.
Pets at Home shares had recouped some of their losses at writing but were still down 41% for the year. However, the shares seem to have bottomed in recent months.
*This is not investment advice.
Pets at Home (PETS) share price.
The Pets at Home share price plunged 10.32% to trade at 275.10p, falling from Tuesday’s closing price of 303.50p.