Pets at Home warns of plummeting profits and lines up closures of 30 vet practices as part of a radical overhaul
- Pets at Home has earmarked around 30 vet practices for possible closure
- It warned that full-year profits will be lower following the costly restructure
- Half-year earnings tumbled by 80.5 per cent to £8million
Pets at Home has fired the starting gun on radical overhaul of its veterinary division that could lead to the disposal of up to 30 of its vet practices.
The retailer warned today that its full-year profits will be lower than expected as a result, after the restructure took a nasty bite out of its half-year earnings.
The overhaul involves buying out 55 joint venture vet practices from its 471-strong Vet Group chain.
Pets at Home has more than 350 stores in the UK and controls 471 vet practices
It said that 25 of these will become company-managed practices, while the remaining 30 will be placed under review – earmarked for potential closure.
Details of the plan emerged as the pet specialist reported an 80 per cent crash in half-year profits to £8 million.
Pets at Home said that the vets business restructure cost it £29million in the last six months
It put the plummet down to the restructure which has cost it £29million in the last six months.
With these costs stripped out, half-year profits fell 9.3 per cent to £37.9million.
Consequently, Pets at Home expects full-year profits to come in lower than planned at between £80million and £85million.
When new boss Peter Pritchard took the reins earlier this year, investors hoped he would help stem some of the decay at the firm, where shares have been on a downward trajectory for the last three years.
But it’s been no walk in the park for the new chief executive so far.
Today Pritchard said: ‘Since becoming the group CEO in May, I have had the opportunity to take stock of the wider group and shape my view of our future.
‘Reviewing our vet group has been a priority. I recognise we have grown at pace and, more recently, have seen the pressure that rising costs and our fees are placing on this young business.’
He added: ‘We will need to recalibrate the business to deliver more measured growth whilst maintaining our plan to generate significant cash profits.’
The firm’s downbeat shares took another trip today to trade at around £1.13.
Pets at Home has been dropping prices in order to reinvigorate the retail side of the business
It follows a recent shake-up of the firm’s pricing strategy aimed at reinvigorating its retail sales.
Today, Pets at Home said retail sales jumped 4.7 per cent after it slashed prices on some of its core products.
Retail analyst Nick Bubb said: ‘Running veterinary practices has not been a licence for Pets At Home to print money, despite the nation’s love of animals. But the guidance for the full year is reasonably robust.’