Market Analysis: Cranswick And Pets At Home

Following Cranswick plc reporting its results Ross Hindle, Analyst at Third Bridge, comments: “Cranswick's LFL revenue increased by 6.4% y/y, driving an 11.5% increase in adjusted EPS.

“Together with the positive top-line performance, the Group was able to expand operating margins 7% despite the challenging cost environment.

“Cranswick, as well as the wider UK meat and poultry sector, is currently facing a triple whammy of rising raw material costs, labour shortages, and CO2 disruptions - this is creating immense pricing pressure.

“Our experts warn double-digit price increases are likely to hit consumers over the months ahead in certain product categories. Speciality products such as pigs in blankets and chicken kebabs could also be off the menu as labour-intensive products are ditched by manufacturers short of staff.

“Specialists believe Cranswick is in a slightly better position to its competitors, thanks to newer manufacturing sites and more automated processing plants.“

Ross Hindle also reports that "Pets At Home Group LFL revenue grew 22.2% y/y, with strong, double-digit growth shown across all three channels."

“Speculation surrounding a private equity acquisition of Pets at Home remains high, especially after the completed deal for online competitor Zooplus.

“Some commentators have suggested an acquisition of Pets at Home will mean the business being broken up, but given how the company derives much of its competitive advantage from its integration we're hearing this would be costly and value-destructive.

“Pets at Home was a clear beneficiary of the UK's desire for pet companionship through the pandamic, with outgoing CEO, Peter Pritchard, steering the company to enormous success.

“Pets at Home VIP Club members continue to show promising growth, with active subscribers increasing to 6.8m and showing no sign of slowing down. Our experts believe the benefits of such memberships have not been fully valued or appreciated by the market. The data-rich insights derived from these membership clubs allow the Group to target spend, promote premiumisation, and capture more of the lifetime value of pet ownership. Thanks to the way we're treating pets more like humans our experts estimate we currently spend around £12k on our four-legged friends over their lifetime.

“Our experts say that Pets at Home has brought together an effective omnichannel strategy, on-site veterinary practices, and a premium product range to capture a pet product sales boom.“



Third Bridge is a global primary research firm that interviews more than 6,000 internationally recognised industry experts and business leaders a year to compile 360-degree market intelligence for institutional investors. www.thirdbridge.com