Pets at Home expects annual profits to drop by up to 17% as retail trading conditions are proving more challenging than initially feared.
The company has revised its guidance for the financial year 2025-26, citing a "subdued market backdrop and uncertain consumer environment" as contributing factors to its struggles.
The firm reported a 3% decrease in like-for-like retail sales over the 16 weeks leading up to July 17, marking the third consecutive quarter of declining sales.
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Pets at Home stated that with market growth predicted to be just 1%, compared to the previously forecasted 2%, it now expects annual profits to fall to between £110m and £120m.
This is a significant reduction from the £133m reported the previous year and the guidance given in May for £115m- £125m.
The group explained: "At our 2024-25 results we set our full-year 2025-26 guidance based around an assumption of 2% growth in the pet retail market.
"While this scenario assumed improving growth through the year, the market growth rates experienced through the first quarter have been below those initial expectations."
Cheshire-based Pets at Home also warned that if market conditions persist as they currently stand, it would likely deliver a result at the lower end of the revised guidance.
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"Reaching the top end of guidance would require a step up in market growth, while the bottom end of guidance would imply a continuation of current subdued market trends through the remainder of the year," it said.
Shares in the company dropped by more than 8% during Thursday morning trading following the profit warning, before stabilising at approximately 5% down.
Pets at Home stated that rigorous cost management was supporting its profit margins, despite a "determination to remain price competitive" and facing an additional £20m in expenses this year owing to escalating wage costs.
The group noted that its Vet Group division was demonstrating greater resilience, with like-for-like revenues surging by 7.8%.
It also expanded its Pets Club membership by a further 1.8% to 8.1m customers, with subscription revenues now accounting for 14.5% of total turnover.
Lyssa McGowan, chief executive of Pets at Home, said: "We are pleased to have seen momentum in our business build through the first quarter, against a subdued market backdrop and uncertain consumer environment."
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