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Agree, thank you for responding
The whole market was down this morning. Maybe PETS were expected to do slightly better than the trading update but it all looks fine to me.
Excuse my ignorance, but is there any reason that there would be such sell off after such good news? Thank you for any responses.
Robert
When budgets are squeezed families switch to lower priced food for their pets. PETS supply high end products.
Lots of shares are trading down today so probably a result of the interest hike yesterday. PETS need to crack on with the £50m share buy back announced recently.
Anything I may have over looked causing the drop as seems rather a lot. Or is it just interest rates uncertainty etc
Thank you
Not so much a "Weak Buy" as a "Long Term Buy" IMHO
I got a few shares at the IPO and have added to them on
dips over the years. Bought another 1,000 today at 480p
This may not be the bottom but "tops and bottoms" are
illusory and if I hit them short term it is only luck not
skill !
Growth won’t come as easily as it once did for Pets at Home. Investors already recognised as much, pricing the shares at 17 times forward earnings, about half the peak reached during the pandemic.
The surge in pet ownership as people switched to home working had set a high bar for sales growth. Pushing forward revenue at a sustainably faster rate than pre-Covid has brought with it a step up in capital expenditure at a time when inflation and foreign exchange market fluctuations have incxreased operating costs. That stifled profit growth last year to just under 5 per cent, even after stripping out costs associated with its new distribution centre.
This year underlying profit is expected to be flat as the company absorbs higher costs together with a £60 million investment bill under a five-year plan. Last year was the peak in terms of spending, which will total £400 million.
The bulk is going towards opening and overhauling more of its shops and improving its website and data analytics, used to determine everything from where to open the next store to targeted marketing. The rest, about a fifth of total investment, will be in expanding the vets business, which by virtue of its smaller scale should lift sales at a faster rate than retail operations. It is the higher-margin vet practices that Lyssa McGowan, chief executive, thinks can help to raise the group’s organic sales growth to 7 per cent a year, ahead of the 4 per cent turned out by the pet care market, alongside a 10 per cent rise in pre-tax profit once the additional costs fall away.
Investors shouldn’t take fright at the prospect of subdued profits in the near term. Investment will be funded by cash generated by the business, of which there is plenty. Free cash rose to £93 million last year, which analysts think will be at a similar level this year. A net cash pile of £54.7 million was enough to declare another £50 million share buyback.
The group has taken its market share to 24 per cent, six percentage points higher than five years ago, while its return on invested capital has been consistently above 20 per cent. That should encourage investors that it is spending wisely.
ADVICE Buy
WHY Investment now could produce greater profit growth over the long term
Indeed but still seems very odd the level of the reaction even more today
I wouldn't worry about the immediate reaction - markets are full of jitters and looking for any negative to mark anything down. This business is going in the right direction.
The larger investors seem assured as Norbel increased its holding by another 1%
I don’t understand all seems good ,at least it’s bounced back from earlier.
Any thoughts on the RNS and sell off. Overall the business is growing at a very nice pace and building on that. Regardless of buy back and explained profits, this is all massively good news non?
Does anyone else have great expectations in this weeks figures? Net profit £150m perhaps?
The new appointment to the board looks like a great asset to the company with a proven track record.
Humpy - you did a very good job of arguing against the position you wanted to take. I particularly like " peeps will continue to spoil their pets if they can." which could be quite a steep slope people would be willing to climb. But let me add another point about the "pester power". Part of the deal of pets, particularly for children, is educating them into the birth-maturing-adult-death cycle of life and particularly the role of the cable responsible individual to nurture & care for an organism - perhaps yourself when you are old - as that organism is exposed to risk or later death.
The "certificate of achievement" of that attribute is not a wider TV but easily quantified by the sacrifices one would be willing to make for the dependent. Pester power is, partially, expressing that attribute parents have sought to inculcate in their children. It is all a complex dynamic with lots of other factors but Fido ain't ever being put out on the street so the kids can have another chocky bar.
This is a good stock and the well ordered, in-store, vet., grooming and care services make it so much more. It was driven down by incorrectly treating it as just another retail stock, I know because my Tesco and Sainsbury's stocks also took a good beating last year as well!
Hi Tony - interesting point, but to say people would rather starve themselves that skimp on their pets is a bit extreme. Yes, we’re a nation of animal lovers, and I am a pet owner - the reason I bought these shares is my own experience of watching other people spaf, and my own kids encourage me to spaf, a fortune at this place - but make no mistake if things got tight I would not visit this place again. I would buy online and avoid the pester power. I’m lucky, I’m comfortable and have locked in my mortgage at a ridiculously low rate, but if my mortgage had just lept and I was struggling with the bills, I’d be cutting down on cr*p for the dogs before I starved my children! Appreciate there is a big fat middle ground, and agree peeps will continue to spoil their pets if they can.
I will try not to be too disparaging " No sign of folks skimping on their pets yet" is absolutely wrong thinking and yet time and again I see it in connection with this share. This is a retail business but to characterise it with that comment is to fail to understand the nature of the business and the psyche of the customers this outlet appeals to. Let me re-phrase it - "customers would rather starve themselves than skimp on their pets". That is why this is going to be so resilient in the difficult times of the near future; there never will be a "yet".
Yes - looks good. No sign of folks skimping on their pets yet. No doubt the market will find something to dislike in it though! I really don’t think this business, or indeed the market it is in, is given enough credit.
Another good news announcement. Revenue revised upwards.
Revenues went up 7% here as well, the issue is energy costs. The USA produces its own energy so not as vulnerable to the global energy crisis.
It was interesting that in the US - a similar company to PET which is called Petco health & wellness - announced yesterday a 7% increase on Revenues and the share price went up 15% in one day!
Would be nice to see this here?!? or if we continue at such a low share price - could they buy us?
BarneyR - The Correct buy price for PETS is a revisit to the March - July 2020 lows - so 240p. That’s how I see it anyway. GL
X-div today so drop a was expected hold well from last night close. I’m happy to hold, inflation headwinds will subside, hopefully soon. This imo will be back 290 - 300 within a year, up to 15% return from here. The company seems to be well run, and still buying back at a lot cheaper rate! (All in my opinion).
Heading for sub 260 very slowly . Overall results were in line but hefty fall in profit . Energy and freight up considerably . Great overall business and it is on my watch list . I just don’t think we have bottomed yet . Thoughts folks ?