Specialist
Former Director at Pets at Home Group plc
Agenda
- Trading update – Pets at Home’s (LON: PETS) top-line sustainability and demand dynamics, including pet ownership growth during coronavirus
- Margin outlook amid supply challenges and cost pressures
- Key growth opportunities and portfolio optimisation
Questions
1.
What key trends have you noticed within the UK pet care market over the past 18 months? How has the market moved through coronavirus to now?
2.
You mentioned the pet population growth. Could you size the UK pet population and how it’s grown since coronavirus?
3.
Do you think the new pet ownership uptick across the UK will stay at this level for the next 3-5 years or is there potential for further pet adoption across households?
4.
How would you value the overall industry and how has that value grown since coronavirus?
5.
You said the new pet population is likely to stabilise. What is your 18-36-month industry growth outlook? What might the key growth drivers be, if not the pet population growth?
6.
Could you break down lifetime value and the typical average spend per lifetime on a pet in the UK?
7.
How do the UK’s lifetime values compare to those of other developed markets such as Europe or the US? Is the UK towards the top end or are other countries spending more?
8.
What will be the key factors for a player such as Pets at Home to move a consumer towards the top end of the lifetime value? Is it premiumising them on food or selling more accessories around food?
9.
How might broad-based inflation pressures in the industry impact Pets at Home and other players’ gross margins?
10.
How does seasonality impact the pet market? You mentioned more accessory sales, which are margin accretive, in the lead-up to Christmas.
11.
Might there be any pricing power between brands and private labels amid the rising costs? Could this ultimately shift the balance within the industry between brands and private labels on the food side?
12.
Some analysts comment this is quite an expensive sales force to run given its size, but it has the benefits you mentioned of being able to upsell customers and push them to a premium or Pets at Home brand, offsetting the cost. Is this the right way to consider it?
13.
Could you explain Pets at Home’s pricing position or strategy? How important is it for the company to price itself correctly across online and retail stores?
14.
Is there any nuanced difference between purchasing online and in retail stores for Pets at Home? Are there any major differences in average spend, basket size or category?
15.
How much growth remains in driving and converting consumers to a Pets at Home membership? What’s the CAC [customer acquisition cost] here?
16.
Where do you expect Pets at Home’s biggest competition to come from – D2C players such as Zooplus, online players such as Amazon or the traditional market such as the grocers? Which segments will have the most competition, given the company is so weighted in accessories?
17.
Given the retail and veterinary aspects’ importance to ensuring the ecosystem works, is there scope for Pets at Home to roll out more retail and vet stores in the UK or has it reached a saturation point it’s comfortable with?
18.
Do you think the big CAPEX expenditure has already happened for Pets at Home and the focus is now on generating return on that expenditure, or is more CAPEX required to bolster future growth?
19.
Is growth outside the UK a viable opportunity for Pets at Home or is there still a lot to capture in the UK?
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