Pets At Home Group Forum

Beaufort on Research Tree this morning: "Shareholders cheered Pets at Home's strong results for FY2016, which demonstrated good financial and resilient LFL revenue growth. The management's confidence in the Group is well reflected in the +39% hike in full year dividend, representing 50% payout ratio which it intend to maintain for the FY2017. The Group expanded its VIP club members to 4.5 million, of which, 3.3 million of them are active members (those who have used their card in last 12 months), through tailored offers of products and services along with improved club member engagement, which continued to provide support to LFL growth. Looking ahead in FY2017, the Group targets opening a further 15-20 Pets at Home superstores, 45-55 vet practices and 50-60 grooming salons. The management expect gross margins to come under pressure primarily due to direct cost impact of National Living Wage (c.+£2m) and weaker Sterling, given that the Group increasingly sources significant level of purchases in US Dollar. The guidance for capital investment of c.£45m (including exceptional investment of £5m as part of a £8m two year energy saving project) was set, while maintaining 1.5x net debt/EBITDA or 1.75x in case of acquisition/investment. Trading so far in FY2017 remains in line with expectations. The Group's ongoing strategic investments in seamless shopping to enhance its system and website, together with growing loyalty scheme, should support merchandise sales (which enjoys a higher 57% gross margin) in the medium to longer term. Recognising the Group's performance, management confidence and its ongoing investment plans, Beaufort reiterates..."

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