Pets at home Regulatory News (PETS)

FOR IMMEDIATE RELEASE, 02 April 2020

Pets at Home Group Plc: FY20 Trading Update 

Pets at Home Group Plc, the UK's leading pet care business, announces the following post-close trading update for the year ended 26 March 2020.

Full-year underlying pre-tax profit slightly ahead of expectations

For most of our fourth quarter the Group traded in line with market expectations1, reflecting the continuous execution of our proven pet care strategy. In the closing weeks of the financial year we have, however, experienced exceptional levels of demand, both in-store and online, as the COVID-19 crisis has developed, and have seen existing customers increase average basket size by pulling forward purchases as well as new customers access our pet products and healthcare services.

Our previous investments in omnichannel capacity, new customer acquisition channels and subscription services had equipped us to meet above-trend levels of demand and, with disruption in Far East supply stabilising relatively quickly, our product availability held up well.

Accordingly, we now expect underlying pre-tax profit for the full year to be slightly above the top end of the range of current market expectations1.

Balance sheet and liquidity

Our balance sheet is resilient and we maintain strong and supportive relationships with our banking partners. We have extensive headroom on debt capacity and covenants with a significant proportion of our committed £248m Revolving Credit Facility (RCF) remaining available for drawdown pre maturity in 2023. Total liquidity including cash balances is approximately £160m, and we expect to end FY20 with a net debt/EBITDA ratio pre IFRS16 of under 1.0x.

In view of the prevailing backdrop, we remain vigilant across our funding requirements, ongoing measures for cash preservation and prudent allocation of capital.

COVID-19 Update

Our priorities are first and foremost to safeguard the wellbeing and safety of our colleagues, Partners, suppliers, customers and pets, as well as ensure continuity of customer service in our stores, Distribution Centres and support offices, and we have implemented a number of protocols in this respect. These include removing all but essential travel, the adoption of alternative working arrangements for colleagues, procedures to protect the health and safety of our colleagues and customers and advice and support to colleagues on maintaining good health and wellbeing.

Our designation by the UK Government as an "essential retailer", together with the national distribution of our UK store estate, means that we can continue providing those pet products and health care services that are deemed essential to the nation's pet owners, at a time when pets are playing an increasingly vital role in our daily lives.

In seeking to strike a balance between providing essential services to the public alongside safeguarding the health and wellbeing of our customers and colleagues, we have closed our Groom Room salons and implemented all Government advice regarding social distancing across our operations. While nearly all of our First Opinion veterinary practices, and all of our Specialist Referral centres, currently remain open to provide urgent and emergency pet health care, in line with industry guidance, we do anticipate reduced customer revenues. This, together with the likelihood of lower store revenues resulting from other necessary measures we have implemented, is expected to have a negative impact on our normal levels of Group turnover as we start the new financial year.

Outlook

Pets at Home is a resilient business with the capability to adapt and respond quickly to changing market conditions. We have an experienced management team who are not only determined to successfully navigate the Group through these unprecedented times, but also to create a stronger pet care business for the future, in line with our previously communicated longer-term strategy. 

Given the uncertain backdrop, we do not think it is appropriate to give financial guidance for FY21 and beyond at this stage. Subject to audit completion timelines, the Group currently plans to announce its final results on Thursday, 21 May 2020, although this date will be confirmed in due course.

Peter Pritchard, Group Chief Executive Officer, commented:

"While FY20 has undoubtedly ended strongly for Pets At Home during this unprecedented time, the period ahead is uncertain for us all, and Pets At Home will not be immune to these challenges that we collectively face. I am extremely grateful that our colleagues and operations have shown such resilience and flexibility to meet the recent exceptional level of demand from both existing and new customers. As ever, in difficult times consumers turn to trusted brands and advice, and that is why we are working tirelessly to ensure that we continue to provide essential products and healthcare services for the UK's pets. 

The health and safety of our colleagues, Partners, suppliers, customers and pets remains our top priority. We continue to take all appropriate action in line with Government advice and remain vigilant to the potential impact of COVID-19 as we start the new financial year. We are also providing support for the communities that need us through £1.1m of funding to nominated pet charities, a £1m crisis fund for colleagues and discounts to NHS workers as they care for the nation's health. Finally, I would like to thank all our fantastic colleagues, Partners and customers for their amazing support during this challenging period. Amidst an unprecedented backdrop, never has our role as a pet care provider been more important, and never have we been more determined to serve the nation's pet owners".

 1. As at 26 March 2020, the Company compiled consensus for full year pre-IFRS16 pre-tax profit was £93.7m, ranging from £92.0m to £97.1m. The impact of IFRS16 is expected to reduce Group underlying profit before tax by c£6-7m in FY20

This release contains inside information

Investor Relations Enquiries

Pets at Home Group Plc:

Roger Tejwani, Director of Investor Relations & External Communications

+44 (0)1279 927022

Jonny Armstrong, Head of Investor Relations

+44 (0)797 5593237

Media Enquiries

Pets at Home Group Plc:

Gillian Hammond, Head of Media & Public Affairs

+44 (0)7442 500138

Maitland/AMO:

Clinton Manning

+44 (0)7711 972662

Joanna Davidson

+44 (0)7827 254567

About Pets at Home

Pets at Home Group Plc is the UK's leading pet care business; our commitment is to make sure pets and their owners get the very best advice, products and care. Pet products are available online or from our 453 stores, many of which also have vet practices and grooming salons. Pets at Home also operates a UK leading small animal veterinary business, with 440 First Opinion practices located both in our stores and in standalone locations, as well as four Specialist Referral centres. For more information visit: http://investors.petsathome.com/

Disclaimer

This trading statement does not constitute an invitation to underwrite, subscribe for, or otherwise acquire or dispose of any Pets at Home Group Plc shares or other securities nor should it form the basis of or be relied on in connection with any contract or commitment whatsoever. It does not constitute a recommendation regarding any securities. Past performance, including the price at which the Company's securities have been bought or sold in the past, is no guide to future performance and persons needing advice should consult an independent financial adviser.

Certain statements in this trading statement constitute forward-looking statements. Any statement in this document that is not a statement of historical fact including, without limitation, those regarding the Company's future plans and expectations, operations, financial performance, financial condition and business is a forward-looking statement. Such forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially. These risks and uncertainties include, among other factors, changing economic, financial, business or other market conditions. These and other factors could adversely affect the outcome and financial effects of the plans and events described in this statement. As a result you are cautioned not to place reliance on such forward-looking statements. Nothing in this statement should be construed as a profit forecast.