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Low footfall causes drop in Pets at Home shares

Pets at Home shares have fallen due to lower footfall.

The pet superstore reported a like-for-like revenue growth however this was offset by their subdued sales over the Christmas period.

HSBC downgraded the stock to ‘hold’ from ‘buy’ and lowered the target price to 230p from 290p after the company reported its third quarter trading update.

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“Structural market growth and maturity should have been strong supporters of positive like-for-like growth, so this is a disappointing performance,” said HSBC.

“Lower footfall was the main cause, with customer feedback suggesting Pets at Home (PAH) needs to improve its value credentials.”

HSBC believes the investment in its own label, which is higher margin than branded products, should support margins.

“Pets at Home’s shift of strategy is likely to see it become more sales growth led and less gross margin led – an encouraging move, in our view. It suggests Pets at Home will increasingly share the benefits of its dominant advanced nutrition position with consumers.”

“It may be a few quarters before we see the benefits of the shift in strategy,” HSBC said.

Ian Kellett, chief executive officer, said in the update: 

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