Pets at Home share price slides despite surging profit

Pets at Home Group Plc (LON:PETS) slid in morning trade today, despite distinctly positive figures presented in its preliminary FY15 results. The report revealed rising revenue and profit as well as a 40 percent total dividend payout ratio.

Pets at Home’s share price had lost 4.03 percent to 268.72p as of 09:58 BST today. Yesterday, the company’s stock reached its highest valuation to date at 285.12p, and it is still some 11 percent higher than the offer price of 245p at listing in March last year.
The group reported annual revenue growth of 9.6 percent to £729.1 million, which generated pre-tax profit of £87.0 million, or 13.5p per share, up from £52.2 million for last year.
Food sales had grown 9.8 percent, while accessories were up 6.6 percent. The Wilmslow-based pet care company generates more than 91 percent of its revenue from food and accessories.
Meanwhile, the services division, which encompasses veterinary care, grooming and other services and generates 8.6 percent of revenue, had grown by 25.2 percent.
The gross margin for merchandise (food and accessories) grew by 19 basis points to 56.3 percent, while services added 630 basis points to 32.6 percent.
Significantly, the company proposed a 40 percent dividend payout ratio for a total dividend of 5.4p per share.
“I am delighted to announce another year of progress as we continue to deliver on our targets for growth, with strong cash flows allowing us to deliver a dividend payment at the top end of our commitment,” chief executive Nick Wood commented.
The company also announced the introduction of a new divisional structure to its business, with the goal of driving performance across the business.
Ian Kellett is appointed as chief executive of the newly formed Retail Division and Sally Hopson, previously Customer and People Director and chief executive of the Vet Group, as CEO of the Services Division.
Looking forward, Pets at Home reiterated growth targets for FY16, noting that trading to date has been in line with expectations. The company restated its goal of opening 20-25 Pets at Home stores, 5 Barkers stores, 50-55 vet practices and 55-60 Groom Rooms during the current financial year.
As of 11:06 BST, Thursday, 04 June, Pets at Home Group PLC share price is 267.65p.

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