November 27, 2018 / 8:22 AM / in 19 days

UPDATE 1-Pets At Home may buy back, close practices to fight rising costs

(Adds details, background, share price)

Nov 27 (Reuters) - Pets At Home Group Plc is considering buying back 55 practices from partners and closing some of those, as it takes a harder look at cutting costs in the face of rising competition and a dearth of veterinarians.

The British pet care group said on Tuesday it would also simplify and adjust the fees at some of its practices in the next financial year as it attempts to win back customer loyalty.

Shares of the company fell 1.4 percent in morning trading to 113 pence.

Pets At Home, which sells everything from pet food, toys and accessories, faces aggressive competition from newer pet food companies and has been trying to bolster its veterinary care and pet grooming services.

The company is reviewing its veterinary business after a shortage of specialists in the United Kingdom held back growth and led to higher salaries, which in turn added to debt and delayed profitability.

Of the 55 practices the company will offer to buy back from joint venture partners, Pets At Home believes 25 would be more profitable if owned outright. Another 30 may not be viable over the longer term, and some of them may be shuttered in the coming months, the company said.

The reorganisation is expected to result in non-underlying income statement costs of up to 49 million pounds and non-underlying cash costs of up to 27 million pounds, the group said.

Pets At Home said overall group revenue rose 6.7 per cent to 499.3 million pounds ($636.4 million) in the roughly six-month period ended Oct. 11.

Revenue is growing as more Britons spend money to pamper their pets but the company’s underlying gross profit margin shrunk by 160 basis points to 50.3 percent, in a sign of growing cost pressures.

Pets At Home recorded a 29.9-million-pound charge that wiped off 80 percent of its statutory profit before tax.

$1 = 0.7846 pounds Reporting by Karina Dsouza in Bengaluru; editing by Sai Sachin Ravikumar

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below