Pets at Home’s pre-tax profit fell 28 per cent to £86.5m for the year to March, as the FTSE 250 pet care group reported a 0.8 per cent dip in statutory revenue to £1.47bn. Underlying profit before tax declined 30.2 per cent to £92.8m, reflecting intense pressure on the retail division, where underlying profit slumped 57.8 per cent to £30.8m. The company’s total consumer revenue edged up 1 per cent to £1.98bn, driven by a 5 per cent rise in the veterinary division to £688.1m, which offset a 1 per cent decline in retail consumer revenue to £1.29bn.
The veterinary division remained the standout performer, with underlying profit climbing 10.4 per cent to £83.8m and statutory pre-tax profit rising 10 per cent to £83m. Growth was supported by higher subscription penetration across Care Plans and Vac4Life, joint venture fee income, and the opening of eight new practices during the year. Average transaction values also strengthened within company-managed practices.
Turnaround strategy takes shape under new CEO
James Bailey, the former Waitrose managing director, took the helm on 30 March after a turbulent period that saw a series of profit warnings and the departure of previous chief executive Lyssa McGowan. Interim leader Ian Burke had already set out an ambitious recovery plan encompassing back-office redundancies, aggressive discounting and product overhauls. Bailey has continued that strategy, focusing on four pillars: “Product, Price, Execution and Cost”.
The retail division has been the centrepiece of the turnaround. The company slashed prices on roughly 1,000 products by an average of 12 per cent, a move that contributed to the sharp fall in retail profitability. Early signs, however, suggest the strategy is gaining traction. Customer satisfaction in stores rose by four percentage points, driven by improvements in value for money, product availability and promotional clarity. Food volumes grew 3.7 per cent in the fourth quarter, with overall volume growth running ahead of sales. The company also launched new own-brand ranges, including Ruff’s Recipes and Willows.
Bailey said the business had made “material progress” stabilising the retail arm, delivering improved satisfaction and better availability. “We have the opportunity now to build momentum through profitable volume-led growth in Retail while continuing to execute the proven growth levers of our Vet business and launch our Insurance offering,” he added.
Despite these improvements, the retail division continues to face fierce pricing competition from non-specialist retailers such as supermarkets, which has weighed on pet food and accessory sales. The decline in retail underlying profit was attributed to operating leverage, with sales and gross margin declines more than offsetting good cost control.
Looking ahead, Pets at Home is preparing to launch its own pet insurance offering later this year, targeting the £2bn UK pet insurance market. The company has received approval from the Financial Conduct Authority and is building the necessary technology infrastructure. It described the move as “disruptive” and part of an integrated pet care model that it says is difficult for competitors to replicate. “As the only UK pet care specialist with highly complementary exposure across omnichannel retail, vets and soon insurance, we have considerable advantages,” the company stated. The veterinary division’s customer satisfaction also improved, rising 1.5 percentage points.
Under its new capital allocation policy, the company has rebased the dividend, cutting it by 43.1 per cent to 7.4p per share, and announced a further £50m share buyback programme. The aim is to return 50 per cent of earnings via dividends and the remainder through buybacks. Free cash flow fell 26.1 per cent to £61.9m. Consensus underlying pre-tax profit for the next financial year (FY27) is expected to be around £99m, with the group having hedged approximately 80 per cent of its energy and foreign exchange requirements and capital investment projected at about £50m.
Analysts assess recovery prospects
Dan Lane, lead analyst at Robinhood UK, said the company “needed to show a credible route to recovery” and has probably reassured investors by maintaining its profit forecasts. “The question now is whether this will stem the tide or we’re looking at a temporary reprieve from heavy price investment and cost cutting,” he noted. The shares dipped into negative territory on Wednesday before recovering to trade 1 per cent higher, though the stock remains 4 per cent down since the start of the year.
Analyst ratings are mixed, with some recommending “Buy” and others “Hold”. Price targets average between 218p and 236p. The trailing dividend yield stands at approximately 7.03 per cent, and the price-to-earnings ratio based on reported earnings over the past 12 months is 11.43.
The UK pet care market, worth an estimated £8.75bn in 2025, is projected to reach £9.91bn by 2032, growing at a compound annual rate of roughly 1.79 per cent. Pet food accounts for 75 per cent of the market, and offline retail channels still hold 60 per cent of sales, though e-commerce is expanding rapidly. Trends include premiumisation, the humanisation of pets, and growing demand for sustainable and ethical products. Cats generate the largest revenue among pet types in the UK, and pet owners spend nearly £5bn annually on veterinary bills and £1bn a year on pet insurance.
Pets at Home maintains its position as the UK’s largest specialist pet care retailer, operating around 460 pet care centres and 455 vet practices. Key competitors include Zooplus, Vitakraft, Saturn Petcare, VioVet and PetPlanet, while the top five players in the broader market – MPM Products Ltd, Tesco Plc, Inspired Pet Nutrition Ltd, Nestlé Purina Ltd and Mars Petcare UK Ltd – hold approximately 60 per cent of the market. Customer feedback on platforms such as Trustpilot generally praises staff helpfulness and knowledge, though some users have reported issues with product substitutions and inconsistencies in subscription deliveries.
