Pets at Home: Growing share of wallet is ‘greatest opportunity’ to return to profit growth

After “unifiying” its brand across its different services last year, including retail, vets and grooming, Pets at Home is now seeking to grow its share of wallet with its consumers across these segments.

Source: Pets at Home

Pets at Home has identified growing its share of wallet as its “greatest opportunity” as it emerges from a “pivotal year” for the brand.

The business’s 2024 financial year, which ended 28 March 2024, was about “building the foundations” for growth as it invested in unifying its brand and a new digital platform.

This financial year will be about returning to profit growth, it told investors today (29 May).

In its 2024 fiscal year, consumer revenue was up by 6.9% to £1.9bn, however, underlying profit before tax was down 3.2% at £132m.

The company noted that its gross margin decrease of 123 basis points was partly due to a £2.2m investment in a TV campaign to support the launch of the master brand, which brings together all of Pets at Home’s services.

As the business looks to return to profit growth this year, it identified growing its share of wallet as its “greatest opportunity”. Increasing the average value of its consumers by just £10 would drive £78m of incremental consumer revenue, the business noted.

The average Pets at Home consumer spends £178 per year with the business, it reported, while its “most engaged” spend over £900, highlighting what it calls “significant growth headroom”.

Over the pandemic years, when pet ownership spiked, the business acquired many new pets. The business reports that over a third (36%) of the pets in its loyalty scheme are less than three-years-old. It believes this sets it up well for future growth, as pets generally require higher spend in the vets part of the business as they age.

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The Pets Club loyalty scheme program now has 7.8 million active members, representing 2% year-over-year growth. The scheme is over 10 years old and has provided the business with data on over 10 million pets.

Pets at Home CEO Lyssa McGowan asserted that the business has “the best view of what consumers spend on pets”, describing the consumer base as “sticky” and “highly predictable”.

This knowledge is helping the business to grow the lifetime value of its customer base by driving frequency, cross-selling and upselling. The business also runs subscriptions, for example on health plans, which now represent 10% of its revenue, up 330 basis points year-over-year.

While the business has identified growing share of wallet as its biggest opportunity, it asserted it is operating in a “structurally growing market”, with trends including premiumisation (as owners seek higher quality products for their pets) and penetration (with pet ownership becoming more accessible) working to grow the total market.

The work over the past year in unifying the brand reflects Pets at Home positioning as “the only true complete pet care provider” holding 23% of the total market value.

While in some its segments, such as premium food it holds considerably more of the market (47% share), in other areas such as grooming (11%) it has much more potential to grow.