Pets at Home’s earnings have been hit by rising shipping and energy costs

Pets at Home, Britain’s largest pet supply chain, has blamed rising shipping and energy costs for the poor performance. Photo: Ian Forsyth/Getty

Pets at Home (PETS.L) lost investor favor on Wednesday after posting lower first-half earnings.

The company, Britain’s largest pet supply chain, blamed rising freight and energy costs for the poor performance.

Underlying profit before tax fell 9.3% to 59.2 million pounds ($70.9 million) during the period to October 13, compared to the same period last year.

Although the Puppies and Kittens Club remained a major source of revenue, it added that people were buying fewer toys and other accessories for their dogs amid the most acute living pressures in a century.

However, customers were still spending money on necessities such as food and litter, and on Christmas ranges.

It comes as Britons have bought more pets during the COVID pandemic as they have spent more time at home.

“I am even more convinced that [email protected] is well-positioned to capitalize on an attractive growth opportunity in a structurally growing pet care market, supported by our unique blend of products and services, established culture and experts, and passionate colleagues and partners,” said Lyssa McGowan, CEO.

“Our performance in the first half shows progression and resilience across the business.”

McGowan, who headed the company for six months, added: “We recognize the challenges many consumers face, and continue to prioritize making pet care as convenient and affordable as possible. We will never allow price to be a reason not to shop with us.”

Read more: UK manufacturers are experiencing the worst drop in new orders for two years

The group reiterated its full-year guidance for core earnings of around £131m, but shares fell 7% in London on the back of the update.

The Pets at Home website has a total of 457 stores, many of which also have vet clinics and grooming salons.

Analysts at RBC said: “Pets are starting to see some evidence of consumer decline, as new customers buy more lower prices, groceries and more private label products.”

Meanwhile, Lara Martinez, analyst at Third Bridge, said: “Our experts say that if Pets at Home wants to gain share in the portfolio, it should start by looking at its existing base of VIPs for pets. There are huge opportunities for increased cross-selling from its divisions.” Retail into veterinary departments and move VIP customers to more healthcare and subscription plans.”

“Pets at Home is doing really well in terms of advanced nutrition of pet foods. The availability of advisors in stores is an important differentiating factor from professional online players like Amazon (AMZN).”

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