Pets at Home has reduced its profit guidance for the next financial year as it battles cost increases stemming from the Budget.
In a pre-close update for the year ending March 27, the retailer said group underlying profit before tax is expected to be £133m, in line with previous guidance.
Pets at Home said while it expects to outperform the market due to digital investments, it has reduced its underlying profit guidance for next year to be in the range of £115m-£125m.
Against a “challenging and volatile UK consumer backdrop”, the fourth quarter has been “broadly as planned” across retail and vets.
The year ends with a record number of Pets Club members and its new digital platform is “functioning well” with a strong growth in subscriptions.
The completion of its network optimisation and new digital platform sets the retail business up to return to sales and market outperformance in the following financial year.
However, the group is facing cost increases including the impact of the rise in national insurance contributions and national living wage increases of around £18m. It also expects costs of £2m from the new packaging regulations.
It plans to make savings through material cost reduction and productivity initiatives for no more than a 5% increase in operating costs, but added that the extent to which it can mitigate further cost inflation is down to the rate of sales growth and consumer demand.
The retailer said: “In this uncertain environment we will focus on what we can control: putting consumers at the heart of our business, being committed to remaining competitive and keeping tight control of our cost base.”
No comments yet