Pets at Home shares could fall further amid uncertain outlook
The UK-based pet supplies retailer saw its annual sales top £1 billion for the first time, but its share price plummeted after management warned its first-half performance will take a hit due to the Covid-19 pandemic.
Pets at Home Group shares are down 10% and could fall further after its management warned that its first-half performance will take a hit due to the Covid-19 crisis.
On Thursday, the pet supplies retailer unveiled its full-year results and despite its annual sales climbing 10.2% to £1.1 billion – the first time the company has hit that milestone – investors drove its share price lower amid its uncertain outlook.
‘As anticipated in our full-year trading update on 2 April, nearly all of the exceptional demand witnessed in the closing weeks of Q4 has unwound during Q1 of the current year which, combined with our adherence to guidelines on social distancing across our operations and restrictions on the sale of pet products and health care services deemed non-essential, has temporarily depressed normal levels of group turnover,’ Pets at Home said in a statement.
The company acknowledged that it will not be ‘immune’ to the economic fallout from the Covid-19 pandemic, with the retailer reviewing its business model to adapt to changing consumer habits that could persist post-lockdown.
Pets at Home full-year results: key figures
The retailer saw underlying pre-tax profit increase 11% to £99.4 million on a pre-IFRS16 basis, reflecting a surge in sales in March as a result of stockpiling by consumers.
Retail like-for-like sales grew 9.4%, while omnichannel revenue climbed 27.8% higher, with Vet Group like-for-like revenue rising 5.6% over the period.
The company also maintained its dividend unlike other retailers, with its final pay-out to shareholders coming in at 5p per share, reflecting the business’ strong performance in 2020 and the strength of its balance sheet.
‘In normal circumstances, it would have given me great pleasure to reflect on another year in which we have grown sales and profits and successfully executed our proven pet care strategy,’ Pets at Home Group CEO Peter Pritchard said.
‘These are, however, far from normal circumstances with the rapid, wide-ranging and devastating effects of COVID-19 having an unprecedented impact on all of our lives,’ he added.
Morgan Stanley upgrades Pets at Home in May
Analysts at Morgan Stanley upgraded Pets at Home from ‘underweight’ to ‘equal weight’ and raised its target price for the stock to 200p per share this month.
Following its full-year results, Pets at Home looks likely to close well above Morgan Stanley's target price, with the stock trading at 223p per share as of 16:15 (BST) on Thursday.
How much does it cost to buy UK shares with IG?
There are three ways to ‘buy’ UK shares with IG: spread betting, trading CFDs or buying physical shares. The cost will depend on which method you choose. The table below illustrates how the costs to get exposure to £10,000 of Lloyds stock, which is equivalent to 16,000 shares (quoted at 62.5p a share).
Remember, spread bets and CFDs are derivatives, which come with higher risk and reward than investing.
Cost to get exposure to Lloyds stock
|Spread betting||CFD trading||Share dealing|
|Action||Buy £160 per point||Buy 16,000 share CFDs||Buy 16,000 shares|
|Capital required to open||£2000||£2000||£10,000|
Note: Amounts do not include overnight funding charges and taxes. Spread bets are not subject to tax. CFDs are free from stamp duty, but subject to capital gains tax. Share dealing is subject to both stamp duty and capital gains tax.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
Act on share opportunities today
Go long or short on thousands of international stocks with spread bets and CFDs.
- Get full exposure for a comparatively small deposit
- Trade on spreads from just 0.1%
- Get greater order book visibility with direct market access
See opportunity on a stock?
Try a risk-free trade in your demo account, and see whether you’re on to something.
- Log in to your demo
- Take your position
- See whether your hunch pays off
See opportunity on a stock?
Don’t miss your chance – upgrade to a live account to take advantage.
- Trade a huge range of popular stocks
- Analyse and deal seamlessly on fast, intuitive charts
- See and react to breaking news in-platform
See opportunity on a stock?
Don’t miss your chance. Log in to take advantage while conditions prevail.
Live prices on most popular markets
You might be interested in…
Find out what charges your trades could incur with our transparent fee structure.
Discover why so many clients choose us, and what makes us a world-leading provider of spread betting and CFDs.
Stay on top of upcoming market-moving events with our customisable economic calendar.