Pets at Home stock tumbles after CEO exit and profit warning

Investing.com -- Pets at Home Group PLC (LON:PETSP) stock plunged about 20% after the company announced the immediate departure of CEO Lyssa McGowan and issued a profit warning amid challenging retail conditions.

The pet supplies retailer said non-executive chair Ian Burke has assumed the role of executive chair while a search for a permanent CEO is underway. McGowan had led the business since 2022.

In an unscheduled trading update, Pets at Home lowered its profit guidance for fiscal year 2026, now expecting underlying profit before tax to range between £90-100 million. The company cited underperformance in its retail segment as the primary reason for the downgrade.

The company reported that the underlying pet retail market has remained subdued, declining slightly year to date. While Pets at Home has seen sequential improvement in its retail business performance, the rate of improvement has fallen below expectations.

Digital sales have shown double-digit growth, outperforming the online retail market, supported by the company’s improved digital platform and strong growth in Easy Repeat subscriptions. However, store sales have proven more challenging, declining 5% YoY.

In contrast to retail struggles, the company’s Vet Group continues to deliver high-single digit sales growth. Pets at Home remains on track to open 10 new practices in FY26, alongside 15 vet extensions.

"This is clearly a disappointing update from PETS, with the anticipated inflection in Retail LFL trends failing to materialise despite annualising disruption effects and with the tailwinds from investments supposedly supporting growth. The debate will now focus on what measures (price, product, range) can be implemented to alleviate market share losses and/or recover the substantial profit declines," according to Jefferies analysts.