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Investing.com -- Shares of Pets at Home (LSE:PETS) climbed 4% today after the company's third-quarter revenue report showed resilience despite a slight year-on-year decline.
The company's revenue for the quarter dipped marginally by 0.2% to £362 million, with like-for-like (LFL) sales growth down by 1.0% compared to the same period last year.
The retail division of Pets at Home experienced a 2.8% drop in LFL sales year-on-year, against expectations of a flat performance. The company attributed the decline to weaker footfall starting in November, although it noted positive digital momentum throughout the quarter and strong growth in its subscription services.
On a more positive note, the Vet Group's LFL sales surged by 19.9% year-on-year, significantly outpacing the forecast of 13.0% growth.
Despite the mixed results, Pets at Home reiterated its guidance for modest profit before tax (PBT) growth for fiscal year 2025, with the Visible Alpha consensus at £134 million. The company also confirmed it has maintained a disciplined approach to gross margins and reported strong sales during the Christmas season.
Capital expenditure (capex) guidance for FY25 remains unchanged at £55 million, aligning with consensus estimates. Pets at Home also announced an earlier-than-anticipated exit from its Northampton distribution center (DC) by the end of FY25, as it transitions online orders to its Stafford DC.
This move is expected to result in non-underlying costs of £11 million in FY25, an increase from the previously forecasted £7 million, with the phasing of costs associated with the DC exit adjusted accordingly.
RBC analysts wrote: "We think Pets at Home is a well-run business, with a market-leading position in the UK specialist pet care sector. PETS operates in a relatively defensive category, but we think UK pet growth is likely to be more muted near term, given strong growth across the pandemic. We expect continued negative mix shift impacts to weigh on Retail profit."
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