- Lower 2026 pre-tax profit
- External cost pressures
- Retail expected to return to growth
Pets at Home (PETS) was in the doghouse with investors on 31 March after the UK’s leading pet care business warned that subdued consumer demand and extra costs could see pre-tax profit fall by around a tenth in 2026.
The shares fell 12% to 208.4p versus a 1% drop in the mid-cap index, almost wiping out the gains made in 2025 and leaving them around 20% lower year-on-year.
COST HEADWINDS
While the company expects to make further progress in the Vet business with an accelerated roll-out of practices, the retail side of the business continues to trade against a subdued consumer backdrop.
Pets at Home said it is facing a circa £18 million impact from the increases in the National Living Wage and National Insurance employer contributions, a £2 million hit from new packaging regulations, a £10 million impact from rebuilding variable pay and £3 million in extra marketing costs to drive sales.
‘We plan to make significant savings through material cost reduction and productivity initiatives to deliver no more than a 5% increase in operating costs in FY26,’ the company said.
Taken altogether Pets at Home anticipates group pre-tax profit in the range of £115 million to £125 million, which implies a drop at the midpoint of a tenth compared with the £133 million delivered for the year to March 2025.
Analysts at Jefferies note the guidance is around 15% below consensus market expectations of £142 million, implying downgrades to forecasts.
Pets at Home expects 2026 to see a return to normalised capital expenditures of around £50 million and does not anticipate further non-underlying costs, setting the base for a return to growth.
The FTSE 250-listed retailer added that it remains committed to its ordinary dividend.
CASH STRAPPED CONSUMER
Russ Mould, investment director at AJ Bell, commented: ‘While Britons are famously devoted to their furry friends, consumers have less disposable cash to spend on toys and treats, and are focusing more on the essentials which is making life difficult for a specialist like Pets at Home.
‘There is also competition from larger, non-specialist rivals like the supermarkets who have more capacity to compete on price.’
Disclaimer: Financial services company AJ Bell referenced in the article owns Shares magazine. The author (Martin Gamble) and the editor (James Crux) of the article own shares in AJ Bell.
