Pets at Home has warned that ‘urgent and necessary’ measures are needed to turn around its retail arm as group profits tumbled by more than a third to £36.2 million
Pets at Home has issued a warning that “urgent and necessary” actions are required to revive the company’s retail division, as it announced a more than one-third drop in half-year profits.
Interim executive chairman Ian Burke, who stepped into the role following the sudden departure of CEO Lyssa McGowan in September, stated that the group was “returning to our retailing roots” in an effort to boost the chain’s performance.
The retailer’s business saw underlying profits plunge by 84.1% to £3.5 million in the six months leading up to October 9, which counterbalanced a robust performance from the vet business and resulted in overall group profits falling by 33.5% to £36.2 million.
Mr Burke commented: “For over 30 years, Pets at Home has been a business with a clear purpose, an established market and loyal customer base, but it’s clear that urgent and necessary action is needed to return the retail business to growth to meet both our own expectations and those of our investors.”
He added: “I’ve spent time visiting over 100 pet care centres and engaging with colleagues at all levels of the business to establish where the challenges are isolated, resulting in the implementation of a retail turnaround plan with four clear priorities of product, price, execution and cost.”
He concluded: “We are returning to our retailing roots to stabilise and rebuild momentum in our retail business, and to lay the foundations for a new chief executive in due course.”
The group revealed that cost-cutting would form a central element of its retail turnaround strategy, targeting overhead reductions of around 20 million.
The company confirmed it had already started implementing a “leaner store operating model” earlier this year, whilst also examining opportunities across purchasing operations, store leases and distribution automation.
“We will continue to look for ways to optimise our cost base either through reducing costs or redirecting them to areas that benefit customers,” the firm stated.
Half-year figures demonstrated that retail consumer sales declined 2.3% during the first six months, with accessories plummeting 5.9% and food down 0.3%.
However, veterinary business sales surged 6.7%, with underlying profits in the division climbing 8.3% to £44.9 million.
The company maintained its recently revised annual profit forecasts for underlying pre-tax profits of £90 million to £100 million, marking a steep drop from the £133 million achieved in the previous year.
It confirmed that the search for a new chief executive was continuing to “progress”.
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