Pets At Home Group Plc · LSE:PETS
Pets At Home — H1 FY2024 Earnings Presentation
40 slides from Pets At Home's earnings presentation, Nov 28, 2023
Slide 1: FY24 Interim Results
FY24 Interim Results 28 November 2023
Slide 2: We have a clear strategy to deliver growth
We have a clear strategy to deliver growth Our purpose To create a better world for pets and the people who love them Our vision To build the world’s best pet care platform Integrated Omnichannel Consumer-centric a unified blend of products, services and advice seamlessly connected an unrivalled exp
Slide 3: Successful execution will support 7% revenue CAGR and 10% PBT CAGR
Successful execution will support 7% revenue CAGR and 10% PBT CAGR over the medium term A growing Consistently Driving high- Reward market taking share quality growth shareholders c4% c300bps +10% £50m Forecast market CAGR over Market out performance pa, PBT grows at 10%, FCF to Progressive dividend
Slide 4: H1 has been a period of high activity and progress against our strategy
H1 has been a period of high activity and progress against our strategy 1 Launched new DC - Stafford DC launched, now supporting 100% of stores. Online fulfilment next. 2 Built digital platform – on track to launch in FY24 as planned. 3 Invested in our physical assets – 3 new stores, 24 refits, 2 ne
Slide 5: Our performance has been resilient whilst delivering on our strategy
Our performance has been resilient whilst delivering on our strategy Consumer Revenue Group Revenue LFL Underlying PBT £1.0bn £774m +6.2% £47.8m +8.6% YoY +6.5% YoY (19.3)% YoY FCF Net Cash CROIC Dividend £23.1m £12.1m 20.1% 4.5p (44.3)% YoY £(31.0)m YoY (139)bps YoY flat YoY FY24 Interim Results 5
Slide 6: Delivering against our strategy
Delivering against our strategy FY24 Interim Results 6
Slide 7: Digital
Digital FY24 Interim Results 7
Slide 8: Our digital investments touch every part of our business
Our digital investments touch every part of our business Colleague Device Consumer App and Practice Management Website System Digital Platform ACE Device Pet Care Centres Consumer Vet Practices Physical Platform FY24 Interim Results 8
Slide 9: They are key to driving greater engagement and winning share of wallet
They are key to driving greater engagement and winning share of wallet Drivers of engagement Lower Quartile Second Quartile Third Quartile Upper Quartile Accessories participation 63% 77% 79% 84% Vet participation 3% 11% 23% 36% Own Brand participation 36% 47% 59% 73% ACV Fanatic c£950 Average VIP c
Slide 10: With the foundations built, we are now delivering sustained improvements in consumer experience
With the foundations built, we are now delivering sustained improvements in consumer experience Data Platform Fully in-housed cloud-based data Pets App solution bringing together VIP, Bringing together loyalty & ecommerce and clinical data to shopping with single sign on create our Customer DNA acro
Slide 11: In H1 we have made good progress and will launch our new app in H2
In H1 we have made good progress and will launch our new app in H2 Launching Partner Spring 2024 Agreed Joined-up Integrated Pet New PMS Pilot Pet Care Care experience One way to manage, subscribe, Personalised 121 experience, bringing Delivering improved interact and shop across together all your p
Slide 12: Distribution
Distribution FY24 Interim Results 12
Slide 13: We experienced short term disruption during transition but have regained momentum
We experienced short term disruption during transition but this was contained and we have regained momentum 0 Sales recovered in line with availability -100 (500) Availability has -300 normalised (1,000) -500 (1,500) -700 Sales vs plan Availability (2,000) -900 (2,500) -1,100 P3 W1 P3 W2 P3 W3 P3 W4
Slide 14: Our new distribution centre is now onstream and primed to support future growth
Our new distribution centre is now onstream and primed to support future growth + 80bps Improvement in availability vs pre-transition + 17% Increase in outbound volumes YTD - 3% Q2 LFL impact due to availability FY24 Interim Results 14
Slide 15: Delivering clear operational and commercial benefits
Delivering clear operational and commercial benefits • Single purpose-built 670k sq.ft. facility • Consolidating legacy infrastructure improves fulfilment capacity and inventory flexibility • Material reduction in online fulfilment costs • Operational efficiencies in property overheads, stock holdin
Slide 16: Retail
Retail FY24 Interim Results 16
Slide 17: We are investing in our stores to offer an engaging and rewarding experience
We are investing in our stores to offer an engaging and rewarding experience for consumers New pet care centres in H1 3 Store refits in H1 24 New groomers in H1 4 FY24 Interim Results 17
Slide 18: Food anchors our retail growth strategy
Food anchors our retail growth strategy, and we are uniquely placed to grow new premium categories Why food is so + 4x + 60% Uplift in Uplift in non- important frequency1 food spend1 Why we are 46 % best placed Share of premium c 7% Premium food market to win food market forecast CAGR What we’ve > 1
Slide 19: Through H1 we have accelerated innovation with encouraging results
Through H1 we have accelerated innovation with encouraging results We have strong own brand penetration, with Driving innovation to offer an lots of opportunity ahead unrivalled proposition to consumers 53% 32% 20% 12% Grocery Bridging Advanced Nutrition Accessories Food Own Brand Penetration Other
Slide 20: Vets
Vets FY24 Interim Results 20
Slide 21: Our vets delivered an excellent performance in H1
Our vets delivered an excellent performance in H1 as the advantages of our unique model shine through For our Partners For the Group +17% + 4% + 17% + 16% Average Practice Practice Consumer Profit Before Revenue Visits Revenue Tax + 13% + 3% + 13% ↑ £ 3.5m Average Transaction New Pet Free Operating
Slide 22: We have made good progress investing behind our pillars of growth
We have made good progress investing behind our pillars of growth We have multiple, complimentary levers of growth, and have made a great start in H1 5 5 Practice Extensions JV Conversions 2 c 10,000 New Openings Additional Sq. Ft. FY24 Interim Results 22
Slide 23: Well on track to hit our medium-term ambitions
Meaning we are well on track to hit our medium-term ambitions +9% CAGR 50% of growth from 50% of growth from strategic investments embedded maturity £493m Consumer Revenue FY23 Embedded Practice Practice Advanced Medium Term Maturity Rollout Extension Capabilities FY24 Interim Results 23
Slide 24: The CMA announced a review into the UK vet sector
The CMA announced a review into the UK vet sector on 7 September 2023 citing four areas of focus 1 The cost of vet services has risen faster than the rate of inflation. 2 Pet owners may not find it easy to access the information they need about prices and treatment options to make good choices. 3 It
Slide 25: Vet inflation has been driven by unprecedented cost inflation
Vet inflation has been driven by unprecedented cost inflation across the UK vet industry Increased vet salaries Average vet salaries up >10% in each of the past 3 years, shortage in driven by low supply supply means a more competitive labour market. Increased locum Surgeries have had to rely more on
Slide 26: Our JV model is unique, freeing practice owners to make their own decisions
Our JV model is unique, freeing practice owners to make their own decisions and provide the best clinical care Vets use their expertise to Clinical autonomy within determine best course of full-service practices action Aligning under a national Strong national brand – brand provides quality VetsforP
Slide 27: Our growth strategy is pro-competitive
Our growth strategy is pro-competitive Open 5-15 new practices a year over the medium term bringing new vet capacity to local New Sites areas. We will invest to extend existing sites as they reach capacity on their original footprint. Extensions More space means more vets, increasing local supply. A
Slide 28: H1 Summary
H1 Summary 1 H1 has been the period of peak implementation, key projects remain on track. 2 Our performance has been resilient whilst delivering on our strategy. 3 Challenges were controlled, managed effectively, and we are back on track. 4 We are well positioned to deliver growth over the medium te
Slide 29: Financial review
Financial review FY24 Interim Results 29
Slide 30: Our performance has been resilient whilst delivering on our strategy
Our performance has been resilient whilst delivering on our strategy Consumer Revenue Group Revenue LFL Underlying PBT £1.0bn £774m +6.2% £47.8m +8.6% YoY +6.5% YoY (19.3)% YoY FCF Net Cash CROIC Dividend £23.1m £12.1m 20.1% 4.5p (44.3)% YoY £(31.0)m YoY (139)bps YoY flat YoY FY24 Interim Results 30
Slide 31: FY24 H1 Revenue
FY24 H1 Revenue Group Revenue (£m) FY24 H1 FY23 H1 YoY Total 774.2 727.2 6.5% Like-for-like 6.2% 6.4% Retail Revenue (£m) FY24 H1 FY23 H1 YoY Food 427.5 387.6 10.3% Accessories 241.6 248.8 (2.9)% Other1 26.9 25.1 6.9% Total 696.0 661.5 5.2% Like-for-like 5.2% 5.9% Vet Group Revenue (£m) FY24 H1 FY23
Slide 32: Group Underlying PBT
H1 profit shape in line with plan; full year PBT flat YoY £59.2m Group Underlying PBT £47.8m FY23 H1 Retail Vet Freight Foreign Additional Brand Additional FY24 H1 Trading Performance benefit exchange NLW increase launch DC costs FY24 Interim Results 32
Slide 33: FY24 H1 Profit
FY24 H1 Profit £m FY24 H1 FY23 H1 Change Underlying PBT Retail 23.8 39.5 (40.0)% Vet Group 32.8 28.4 15.7% Central (8.8) (8.6) (2.7)% Group Underlying PBT 47.8 59.2 (19.3)% Non-underlying items1,2 (13.1) (5.8) Statutory PBT 34.7 53.4 (35.2)% Underlying PBT margin 6.2% 8.1% (197)Bps Underlying basic
Slide 34: FY24 H1 Investment
FY24 H1 Investment £m FY24 H1 FY23 H1 Investing in our Supply Chain 3.3 19.3 Launched new DC in Stafford, now supporting 100% of stores Store Refit Programme 10.7 13.4 24 refits completed in H1 Supply chain and warehouse management systems, enhancing Digitising the Business 1.6 3.4 inhouse capabilit
Slide 35: FY24 H1 Free cashflow
FY24 H1 Free cashflow £m FY24 H1 FY23 H1 Net cash flow from operating activities 103.1 142.9 Lease payments1 (38.1) (37.2) Net cash capex2 (22.4) (42.4) Net interest3 (7.7) (7.1) Purchase of own shares for colleague share schemes (11.8) (14.8) Free cashflow 23.1 41.4 Equity dividend (39.5) (37.0) Ac
Slide 36: Our balanced capital allocation is closely aligned to our strategic priorities
Our balanced capital allocation is closely aligned to our strategic priorities Over £250m returned to Capital Priorities shareholders in the last 5 years Further 1. Investment in c£400m investment over medium term, maintaining CROIC £50m buyback in the business at c20%. Run rate of £50m capex pa in
Slide 37: Our financial framework will reward shareholders with compounding growth
Our financial framework will reward shareholders with compounding growth and strong cash flow 1. 2. 3. 4. Grow sales Grow profit Drive strong, Reward ahead of the ahead of sales improving FCF shareholders market +7% +10% c70% £50m CAGR sales growth, 300bps Grow PBT at 10% CAGR over FCF conversion to
Slide 38: Appendix
Appendix FY24 Interim Results 38
Slide 39: FY24 Outlook
FY24 Outlook Customer Revenue Ahead of medium-term ambition (c7%) Underlying PBT Flat year-on-year (c£136m) Non-underlying costs c£24m Effective Tax Rate 26% Investment c£90m (£60m capital + £30m digital/opex) Cash Expect to end year in net cash position FY24 Interim Results 39
Slide 40: Disclaimer
Disclaimer Forward-looking statements This presentation is provided for information only and is solely for use at the Pets at Home Group plc (“Pets at Home”) Interim Results presentation held on 28 November 2023. It does not contain all of the information that is material to an investor. This presen