Pets at Home Group

Website: Pets at Home Group
Index: FTSE 250
EPIC: PETS
Supersector: Retail
Sector: General Retailers
Subsector: Specialty Retail
Market Cap: £916.35M
Payout Frequency: Semi-Annual

Pets at Home Group Dividend Analysis and Summary

Key Dividend Details

Financial Context and Coverage

H1 underlying basic EPS: 5.7p; interim DPS of 4.7p implies an H1 payout of ~83%.
H1 Free Cash Flow: £34.0m; comfortably covers the interim cash outlay (~1.6x).
FY26 underlying PBT guidance: £90–100m; tax rate 27–28%. Implies full-year EPS likely around mid-teens pence.
Leverage and liquidity: Adjusted net debt £12.0m at H1; year-end net debt expected ~£25m; RCF headroom ample.
Ongoing capital returns: £25m buyback for FY26 (50% complete), c.9% share count reduction over ~4 years.

Analysis: Sustainability and Growth

Sustainability: Near-term cash generation and low leverage support the 4.7p interim. However, the implied ~83% H1 payout versus the 50% policy suggests limited headroom if earnings remain pressured.
Full-year cover: If FY26 EPS lands around mid-teens pence and total DPS remains around the prior year’s ~13.0p, dividend cover would be thin (roughly ~1.1–1.2x), above cash break-even but tighter than policy suggests.
Trajectory: Interim held flat signals a desire to maintain the dividend through the retail turnaround. Any acceleration in Vet Group profit (>£80m guided) and cost savings (£20m overhead reduction targeted) would improve cover into FY27.
Capital allocation: Management continues to invest (capex c.£50m FY26) and pursue buybacks (£25m FY26). If conditions tighten, buybacks are the most flexible lever to preserve dividend capacity while aligning with the 50% payout policy.

Structural/Policy Considerations Affecting Future Dividends

Retail turnaround: Focus on Product, Price, Execution, Cost; includes targeted price investment and margin reset. Near-term drag on retail profitability but aimed at restoring growth and medium-term cash flow.
Restructuring: Overheads to reduce by £20m (non-underlying costs £6–8m in FY26). One-offs in FY26, full benefit from FY27—supportive for dividend cover over time.
Insurance venture: Launch in 2026; FY26 start-up losses now ~£5m (from £3m). Modest near-term drag; potential longer-term recurring revenue.
Vet JV/company-managed mix: Ongoing conversions in both directions; JV model continues to underpin fee income and cash generation—core support for dividends.
Buybacks: Continuing programme (£25m FY26) reduces share count, supporting per-share DPS sustainability if earnings stabilize.
Dividend policy: Reaffirmed medium-term target payout of ~50% of EPS; current H1 payout above this suggests scope for final dividend to flex with earnings.

Risks/Flags to Dividend Stability

Retail underperformance: H1 Retail underlying PBT £3.5m (-84% YoY); gross margin down 105bps on price investment/mix/supplier income. Execution risk in turnaround.
CMA investigation: Provisional findings acknowledged; final decision in 2026. Adverse outcomes could pressure Vet Group profitability/cash flow—key to dividend support.
One-off and start-up costs: FY26 restructuring costs £6–8m and insurance losses ~£5m temper near-term earnings and cash.
Working capital timing: H1 benefit expected to unwind in H2, moderating FCF versus H1.
Cost inflation: Wage/NIC increases and potential ongoing price investments can further pressure Retail margins if not offset by execution and mix improvements.

Dividends Used in Calculation:

Ex-Dividend Date	Payment Date	Type	Amount	Currency
05/12/2024	10/01/2025	Interim	4.70p	GBX
05/06/2025	16/07/2025	Final	8.30p	GBX

Total (Annual Dividends Per Share): 13.00p

Dividend Yield = Annual Dividends Per Share (13.00p) ÷ Share Price (202.8p) = 6.41%

Ex Dividend Date	Payment Date	Type	Amount	Currency
04/12/2025	09/01/2026	Interim	4.7000p	GBX
05/06/2025	16/07/2025	Final	8.30p	GBX
05/12/2024	10/01/2025	Interim	4.70p	GBX
06/06/2024	16/07/2024	Final	8.30p	GBX
07/12/2023	12/01/2024	Interim	4.50p	GBX
15/06/2023	11/07/2023	Final	8.30p	GBX
01/12/2022	06/01/2023	Interim	4.50p	GBX
16/06/2022	12/07/2022	Final	7.50p	GBX
02/12/2021	07/01/2022	Interim	4.30p	GBX
17/06/2021	13/07/2021	Final	5.50p	GBX
03/12/2020	08/01/2021	Interim	2.50p	GBX
18/06/2020	14/07/2020	Final	5.00p	GBX
05/12/2019	10/01/2020	Interim	2.50p	GBX
13/06/2019	16/07/2019	Final	5.00p	GBX
06/12/2018	11/01/2019	Interim	2.50p	GBX
14/06/2018	17/07/2018	Final	5.00p	GBX
07/12/2017	12/01/2018	Interim	2.50p	GBX
15/06/2017	14/07/2017	Final	5.00p	GBX
01/12/2016	06/01/2017	Interim	2.50p	GBX
18/08/2016	19/09/2016	Final	5.50p	GBX
10/12/2015	08/01/2016	Interim	2.00p	GBX
13/08/2015	14/09/2015	Final	3.60p	GBX
11/12/2014	16/01/2015	Interim	1.80p	GBX

Year	Interim	Final	Currency	Total	Change
2024	4.700	8.300	GBX	13.000	1.560
2023	4.500	8.300	GBX	12.800	6.660
2022	4.500	7.500	GBX	12.000	22.440
2021	4.300	5.500	GBX	9.800	30.660
2020	2.500	5.000	GBX	7.500	0.000
2019	2.500	5.000	GBX	7.500	0.000
2018	2.500	5.000	GBX	7.500	0.000
2017	2.500	5.000	GBX	7.500	-6.250
2016	2.500	5.500	GBX	8.000	42.850
2015	2.000	3.600	GBX	5.600	211.110
2014	1.800		GBX	1.800

Number of Shares:

Payment	Paid	Amount
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