August 2, 2019 / 6:57 AM / in 18 days

UPDATE 2-Pets at Home sees upbeat profit as demand for pet food, vet services rise

* Shares up 6%, top of FTSE midcap

* Retail result “outstanding” - Liberum

* Retail sales up ~9%, vet revenue ~19% (Adds context on wider retail sector, analyst comments, shares)

By Justin George Varghese

Aug 2 (Reuters) - British pet supplies retailer Pets at Home Group Plc said on Friday it expected full-year underlying profit to be slightly above current market estimates on higher demand for its pet food and vet services.

Pets at Home shares rose as much as 6.5% to 229.6 pence at 0747 GMT, their highest in over 2-1/2 years, after the company also reported a 9.9% rise in revenue during the 16 weeks ended July 18, with retail revenue rising 8.7%.

The company’s upbeat profit view and strong results are a bright spot in an otherwise gloomy British retail sector, which has been hit by the rising popularity of online shopping and Brexit uncertainty.

“The Retail result in particularly is an outstanding performance for the period, when considering the general retail market backdrop,” Liberum analysts wrote in a client note.

Pets at Home said analysts on average currently estimate underlying pretax profit of 85 million pounds for fiscal 2020.

“At this early stage in the year, and with ongoing uncertainty across the wider retail sector, we remain cautiously optimistic and focused on delivering our pet care strategy,” Chief Executive Officer Peter Pritchard said in a statement.

VET PUSH PAYS OFF

Sales at its vet business rose 18.8% to 37 million pounds ($44.83 million) in the quarter.

Underlying performance at the vet business was in line with its turnaround plans and the financial impact of buying out a number of joint venture vet practices was “comfortably within expectations,” Pets at Home said in a statement

Pets At Home had decided last year to expand its higher-margin veterinary practice after its traditional business of selling dog and cat food struggled with weak sales.

However, a shortage of specialists in the UK had hampered those plans.

“Offering the right products at a fair price and delivering excellent customer service is the key to success in retail and there are early signs that Pets at Home has regained its focus and is doing the right thing,” said Russ Mould, investment director at AJ Bell.

$1 = 0.8253 pounds Reporting by Justin George Varghese in Bengaluru; editing by Patrick Graham, Anil D'Silva and David Evans

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