Pets at Home suffers from disruption of move to giant new Stafford warehouse
Pets at Home says its profits have been shaken by the cost of a giant new distribution warehouse in Staffordshire.
The retailer today spoke of "disruption" caused by the move to the new centre, which opened in May.
The business said that the hit to retail revenue it experienced in the second quarter of the year had "normalised" since, and it was now seeing like-for-like growth of around four per cent.
The problems caused by the move to the site in Stone Road, Stafford, meant that it became more difficult to keep shelves fully stocked in its shops around the country.
Normally it has around 95 per cent of its products available in store, but this dipped to as little as around 80 per cent during the disruption.
"This understandably impacted our sales performance," Pets at Home said.
Retail revenue, which had grown 7.1 per cent like-for-like in the first quarter, was down to 2.7 per cent growth in the second.
The business said that pre-tax profit dipped by more than a third to £34.7 million in the first six months of the year.
This was in part due to around £8 million of higher logistics costs and one-off charges of £13.1 million it racked up in the move to the 670,000 sq ft warehouse, which employs around 750 staff.
"This was the period of high activity when we relaunched our brand, launched our new distribution centre, built our new digital platform, and made progress expanding and improving our physical assets," said chief executive Lyssa McGowan.
"This period has not been without challenges, but we have been able to manage these well and are on track to finish the 2024 financial year with a refreshed, modernised infrastructure, fit to deliver growth for many years to come."
Pets at Home said that it had made no change to its underlying pre-tax profit guidance, which is expected to be around £136 million.
The business said that it had met with the Competition and Markets Authority (CMA) which in September announced a probe into the veterinary sector.
The CMA was worried about rapid inflation in the cost of vet services, poor transparency over who owns veterinary practices and referrals between practices within the same corporate group.
Pets at Home said that inflation had been driven in part by a double-digit percentage rise in the salaries of UK vets in each of the past three years as labour shortages hit.