Vet practices in the north under threat as Pets at Home reports dramatic fall in profits
A TOTAL of 11 vet practices in the north are under threat after Pets at Home announced a dramatic slump in pre-tax profits.
The UK's leading pet specialist has said it plans to buy out 55 of its 471 joint venture pet practices and will put around 30 of those under review for possible closure as part of an overhaul of the division. Exact details of the affected practices have not been revealed.
A total of 11 joint venture practices operate in Northern Ireland under the Vets4Pets brand. The practices are located in areas of Belfast, Lisburn, Craigavon, Larne, Ballymena, Bangor, , Newtownabbey, Newtownards and Carrickfergus.
Details of the plan came as the company reported pre-tax profits crashing 80.5 per cent to £8 million in the six months to October 11.
Interim results showed bottom-line profits were hit by £29m in costs from the vet practice changes.
On an underlying basis and with this stripped out, half-year pre-tax profits fell 9.3 per cent to £37.9m.
Pets said it is now expecting full-year underlying pre-tax profits of at least £80m to £85m.
Group chief executive Peter Pritchard said:
"Since becoming the group CEO in May, I have had the opportunity to take stock of the wider group and shape my view of our future.
"Reviewing our vet group has been a priority. I recognise we have grown at pace and, more recently, have seen the pressure that rising costs and our fees are placing on this young business.
"We will need to recalibrate the business to deliver more measured growth whilst maintaining our plan to generate significant cash profits."
Speaking after the results, Mr Pritchard told the Press Association up to 300 staff work within the practices under review, but the group aims to redeploy to nearby where possible.
He said the overhaul was not down to a poor performance of the division, but the need to "rebalance" the vet chain after rapid expansion.
"Yes, we have opened an awful lot of practices and, yes, we have got a small number of those wrong," he said.
Of the practices under review, Pets at Home said it will look to pay off outstanding debts, settling any liabilities for third-party bank loans and leases on behalf of the practice.
Paul Hickman, an analyst at Edison Investment Research, said Pets at Home was "facing up to the challenges of setting up a joint venture vets business to combine with its retail operations".
"The new strategy of internally-appointed chief executive Peter Pritchard is unveiled.
"At its centre, the proposition that Pets is to become a business that will deliver complete pet care may cause some to question what has changed."
"It has four main pillars: bring the pet experience to life; deliver 50% of sales from pet care services; use our data to better serve customers; and set our people free to serve. These sound intelligent, if not exactly groundbreaking," Mr Hickman added.