Hello, and welcome to the Pets at Home Q3 FY24 trading update. I'd like to turn the call over to your host today, Ms. Lyssa McGowan, CEO. Please go ahead, ma'am. Good morning, everyone, and thank you for joining us for our Q3 update call. I'm Lyssa McGowan, CEO, and I'm here with Mike Iddon, our CFO. As you'll have seen from the release this morning, we delivered a resilient Q3 performance over what was a tough trading period and lapping a very strong performance in the prior year. Our 3.7% like-for-like in retail was one that most businesses would be very pleased with, but against our own very high standards and expectations, we did fall a little short in a period of muted consumer demand, as you'll have heard elsewhere. Our food business remains in a great position. We're winning share and growing volumes, with any slowing down due to inflation dropping away a little during the quarter. Accessories growth remains soft, though, as we lap the toughest of last year's comparatives. We've seen this trend through much of this year, and getting this part of the business back into growth is a key area of focus for us going forward. The slower than expected growth in retail means we now expect to fall slightly short of our PBIT guidance and expect PBIT of around GBP 132 million this year, 3% below our previous expectation of GBP 136 million. While retail saw some tougher conditions, our vets' performance remained very strong. At over 13%, our like-for-like was slower than the exceptional growth in H1, but this was in line with our plans. Our expectations for vets through the rest of the year are unchanged. It's been a year of further strong strategic progress in that business. Our vet group is attracting more talent, more customers, and increasing the proportion of advanced treatments that we carry out. We're investing behind this growth opportunity, and in the quarter, we made progress extending existing sites, converting more of our company managed sites to our unique JV ownership model, and in selecting our new PMS system provider. Lastly, an update on our new digital platform, which will launch to consumers over the next few weeks, in line with our target to have it launched by the end of this financial year. This launch is a key component of our growth strategy and will bring a vastly improved user experience, personalization, leveraging our incredible first-party data, and upsell and cross-sell opportunities, which will benefit our accessories business in particular. We look forward to updating you further on this next quarter. Overall, while Q3 didn't quite live up to our high expectations, the business remains in great shape. Our vets business is delivering differentiated performance, fueled by our practice owners. We're winning share in food and growing volumes, and with the launch of our new digital platform, following quickly on the heels of our new DC launch, the major foundations of our strategy to build, build the world's best pet care platform are coming into place. With that, we're ready to take your questions. Thank you very much, ma'am. Ladies and gentlemen, if you'd like to ask a question, please press star one on your telephone keypad. Our very first question today is going to be coming from Matthew Abraham, calling from Berenberg. Please go ahead. Your line is open. Morning, all. Thank you for taking my questions. Just the first one is on the pullback in discretionary retail spend. Can you just talk about what your expectations are for the fourth quarter and how that compares to the quarter just gone and also into FY 25? Additionally, I'd just like to ask what expectations you have in terms of the uplift or the benefit from the introduction of the new digital platform and when you expect that to come through in top-line numbers. And finally, just a query on vet talent improvement. Can you just talk through some of the specific levers that you're pulling to achieve that? And if that's through cost increases relative to what's been incurred historically. Thank you. Mike, do you want to take the first one of those on Q4 expectations on growth, and then I'll take the digital platform and vet improvement? Yeah. No, thanks, thanks, Matthew. So Q4, we're reporting today our Q3 is at 3.7%, and our Q4 like-for-like, we're not expecting or not, not from a financial planning point of view, built into our full year 1 32 guidance, we're not expecting our like-for-like to be more than 2% in the balance of the year. We're pretty much assuming the shape of that will be the same as we saw in quarter three, which is, you know, food business remaining in good growth, consumable accessories are the same. But, you know, we, we recognize it's gonna take some time, given the subdued consumer appetite for discretionary, not just for us, by the way, but for the general market, to play through in terms of stronger growth in discretionary accessories. So from a financial planning point of view, we're assuming around 2% like-for-like for quarter four. I think the final point to that, of course, is we are trading over a really strong quarter four last year. You may remember we did 11%, like-for-like in quarter four in retail in FY 2023, so that's 2% on a very, very strong comp. ... Thanks, Matthew. Your other two questions. So the new digital platform really is at the core of our strategy. What we're cutting over in the next few weeks is the retail piece of that, which will give us a significantly improved UI and ability to leverage our data, subscriptions capability that's significantly improved, recommendations, just all around a significantly improved experience. That's the first part of the journey. As we move through the next year or two, and as we laid out in May, we're going to be adding vets into that platform, pet care journeys, and other improvements. So this is the start of the journey. And really, you'll see the benefits of that come through in our overall financial model, which we also laid out in May, which is in a market growing at 4%, we'll take share and grow our top line at 7%. And you'll see that come through across the piece really, not just in online sales, but actually in overall share of wallet. Our average customer today spends 160 GBP with us. That's about 30%-40% of their overall share of wallet. So by creating a platform that is omni-channel, integrated, and consumer-centric, powered by data, which we have an incredible amount of, we will see that we will gain share, and that is a share of wallet game. Making it easy, making it seamless, making it simple, making us the one-stop shop, the destination for all of our pet care needs. So the platform itself, the digital platform, is baked into our overall growth, our overall growth formula. In terms of vets, you asked about cost. No, the improvements we're seeing in vet and nurse availability are not related to inflation in salaries or inflation in cost over and above the market. In fact, we're seeing a decreased use of very expensive locums as we're able to win more talent, so that's actually a tailwind in terms of cost. The initiatives that we've undertaken are in terms of recruitment, retention initiatives, looking into other geographies, and actually our unique joint venture model here is a real plus. We are now running, and have been running for some time, the sort of vet practices that attract talent, that are growing into advanced practices, that have owner-operators who passionately care and are driven to drive great business and great clinical outcomes because they have that operational and clinical freedom. So it's coming together behind our unique model, the interventions we're making in recruitment and retention, and certainly not a cost-driven growth. Great. Thank you. That's really helpful. I'll pass it on. Thank you, Winter. We'll now move to Kane Slutzkin of Numis, please. Your line is open. Thanks, guys. Morning, guys. Just a quick one. On the vet growth of 13%, could you just break down the sort of components of that in terms of price visits, and maybe mix? And how is that tracking your the sort of medium-term target, or at least what's implied by your medium-term target, I think, was 9%. And then, just on some sort of leading indicators, I noticed you didn't really provide anything on sort of puppy, kitten, club, new client registrations, or subscription trends. Is there anything to add there? Thanks. Do you want to take the vet one, and I'll do leading indicators? Yeah. So vet growth, 13.3%, Kane, in the quarter. And of course, on a two-year basis, after you do the math, our vet growth stepped up quarter three compared to quarter two. All, all of our vets, of course, set all their pricing independently. So getting to that split you're asking on volume and pricing isn't quite as straightforward. We don't simply have central control of pricing. When we looked at it at the half year, you may remember we had, the half year vet group growth was, 17%, and I think, I think that it was about 14%. Is it a 14% price for the 4% visits? 4%, yes. You know, one of the things why we're continuing to grow the vet group so strongly, to Lyssa's point earlier, is we've got... You know, we're making great progress on hiring more vets, and with, you know, very strong demand for small animal healthcare, and we provide the supply. And of course, we've got capacity, and we're still signing on new clients and new pet registrations. We're seeing strong revenue growth off the back of it. So, you know, we are, you know, we're very pleased with the progress we've made in the vet group, and I think some of the levers of growth now are really, really well proven. You asked for those numbers on puppy and kitten and new pet registrations. We haven't put them in the statement this time around because we think, you know, you know, that those are sort of statistics that we expect to start to come up a little bit, and they're not as relevant now going forward. But we're still growing significantly faster, for example, on both of those than we were pre the pandemic. Yeah, I think that's right. I mean, if you look at our VIP Club, up to 7.7 million members now, it's up 2%. So we're still seeing consumer growth, we're still winning share. And as Mike says on those leading indicators, while we have settled at a normalized level following what was probably an extended boom, even a year longer than we thought, and we have normalized, they have settled at a much higher level than they were pre-pandemic. So the population's higher, the renewal rates are higher, and we're not seeing anything that would worry us at all on churn, actually, and those cohorts are moving through as expected. So this year is a normalization year following an extended boom. Next year, we'll see. We'll be lapping a normalization year. So confident that those leading indicators are in really good shape. I think with the launch of our new digital platform, with a renewed app, a brand new app, we will see that we've got even more ability to sign up and lock in customers to our retail system. Great. Thanks. Sorry, Mike, can I just ask one quick follow-up just on the pricing? I know it's localized. I'm just wondering, I've seen sort of peers as well as yourselves in the past talk about more accurate pricing or better charging. Just wondering, is that still a feature, and how do you sort of marry that with the sort of macro, and maybe even the sort of little bit of a CMA overhang, or at least CMA bringing down the sectors next? Thanks. Yeah, I mean, there's a couple of things that play into the value part, so the growth. Well, accurate pricing is definitely one of those. Obviously, we're providing our vet sort of technology and the, you know, and the skill sets to be able to do that, and notoriously in the past, that hasn't always been the best accurately charging, so we've made great progress there. The other component, of course, is the growth of curative as a percentage of the total revenue of the vet, so curative being higher end procedures, and we're making great progress there. You may remember that advanced practice, advanced procedures was one of the building blocks of our revenue growth we set out, we set out last May. Both of those are playing into the fact that revenue got, you know, really strong, 13% revenue growth in our vet business. Great. Thanks, Mike. Cheers. We're now moving to Manjari Dhar of RBC. Please go ahead. Hi. Morning, guys. Thanks for taking my call. The first one, I was just wondering if you could give a bit more color on the volume versus price breakdown for food versus retail. And then secondly, just on gross margin, I appreciate that has been improved in Q3. I was just wondering if you could give a bit more color on the major moving parts to that and how you see it moving into next year. Yeah, thanks for those questions. On price versus volume, we're not giving kind of complete splits, but I think it's safe to say that the trends that we saw all of last year have continued into this year, with food and consumables really strong and our core accessories a little bit behind. And I think that mirrors the trends that you would have seen across the market this Christmas. Overall, netting out at a 3.7% retail like-for-like is a really robust performance in the marketplace. But certainly food retailers have been stronger and discretionary accessories quite a bit weaker than that 3.7%. And our volumes and across the categories would have been no different. Getting core accessories back to growth is a really key priority for the business. There's three big levers we have really that we're after. The first is, bringing our innovation, our quality credentials to the fore. We're already expanding our range, ranges. We've recently launched Cocp Pup. We've recently launched Lords & Labradors, which is two higher end ranges. We're working at the more affordable ranges, end of our ranges as well, and we're seeing great innovation come through. Secondly, the digital platform I spoke about, the really growing part of the market and accessories is online, and our new digital platform and website gives us significantly better capability to market and sell and recommend and use our data to target those against the right consumers. Thirdly, we know that where we get our seasonal ranges really right, where we lean into gifting, so Halloween was really strong, Christmas is strong. We've got Valentine's out on the shelves today. Easter's in the warehouse. We know that where we get it right, we're enabled to merchandise while customers are responding. We just need to do that in our stores more often. Very confident about getting accessories, core accessories back where they need to be in plenty of levers. Mike, do you want to take the second question? Yeah. Hi, Manjari. Yeah, you asked about gross margin percent and sequentially, we commented that it's improved from H1. We'd expect to do that, by the way, because H1 was held back a little bit, remember, by advertising, one-off brand advertising in our vet business and the impact year-on-year of FX playing into our food business. You know, as we look into next year, you know, we'd expect to see our vet gross margin continue to expand. The reason why that is, is we've planned for very good revenue growth. We've seen the 13% in the quarter, but also the cost base doesn't grow up that significantly. So structural gross margin expansion. Some of the headwinds that have held back the gross margin in our food business, and particularly in our retail business, I'm particularly thinking about FX, that starts to become a tailwind as we go from FY 2024 into FY 2025. In our retail business, and certainly our food business, in effect, we're aiming for 3 targets there. We're aiming to get like-for-like growth, maintain a target on gross margin%, and grow market share. And I think on the year just gone, we've been very successful in our food business at achieving that. And that price position, I think, is helping us hold up really strong food growth, and we know that's going to continue to be key for our success as we head into FY 2025. So yeah, I think expect to see gross margin in Vets continue to expand, and our gross margins in our retail business sort of flatten out compared to the declines we've seen this year. I was just wondering on Red Sea disruption, how that impacts sort of incoming changes for accessories? Yeah, thanks for that question. So we source nearly all of our food in the U.K., so that business is unaffected. And actually, we've talked a lot about the long-term supply deals we've done recently with Cranswick, which gives us real U.K. sourcing right to the farm. In terms of accessories, we have an Asia sourcing office, which both designs and manufactures a good portion of our own brand in the Far East. But our stock is relatively very slow-moving compared to, say, a fast fashion retailer. We've had a lot of disruption over the last two or three years, which we've managed really well. We have quite a lot of depth of cover, particularly aided by our move to our distribution facility in Stafford. And as I said, Easter's already in the warehouse, so we're not. We're much less exposed than most retailers, actually, to any of that potential disruption. And we're confident that, you know, as we see it going forward over the next weeks and months, that we're in good shape there. Thank you very much, ma'am. Our next question is going to be coming from Andrew Wade, coming from Jefferies. Please go ahead. Hello there. A couple of questions from me. First one on growth in the retail business, unsurprisingly. You talked, Lyssa, there to market +4% and taking share, but obviously a bit below that at the moment. Just interested as to your take on whether you think the market isn't 4% or you're losing share. And, you know, I guess you gave us a hint there where you talked about VIP Club at 2% growth as winning growth and share. But I guess, what gives you confidence in that view? That's the first one. Yeah. So look, on that, I think, in food, we're definitely winning share. And, you know, we've got enough deep, deep relationships with suppliers to know that that's the case, not least that on the VIP Club, still growing ACV up, and our consumer revenue is overall 6% up. The area which is much harder, to get data on and compare is our accessories. But we're confident that over the next year and, also we've got the levers with the new digital platform, with the new ranges coming in, to get that business back where it needs to be. And over the long term, we see no reason, and no change in the market. The market was growing at 4% pre-pandemic. We see no reason, in fact, probably more reason to believe humanization, premiumization, penetration, those trends are all still there, post-pandemic. I think what we have seen, and I alluded to it a bit when I talked about the cohorts, is that we have had this extra year probably of boom, and we are in a normalization period now. Next year, we'll be lapping a normalization period. So while it's never gonna be, our financial model is never gonna be straight line for seven, ten over, you know, over the five years, I still think that formula is the right one for our business. Okay, well, that sort of follows into my next one. Looking at sort of FY 25, I touched on it briefly with Mike earlier, but I'd be interested to get your thoughts, Lyssa. Given the slower market at present, do you still think for FY 25, it's reasonable to be thinking about market plus 4% and Pets taking a bit of share on the retail side of things? Yeah. So we're not giving guidance yet for FY 25. I think we've still got some work to do internally. It's an evolving, rapidly evolving market, and we need to work that through. I don't know if you've got anything more to add there. Yeah, we're right at the heart now of our planning period for FY 25, Andy. So we're working that through the detail of that, but clearly, we'll be growing off an actual base of revenue, which is lower than we would have had, but the Q3, Q4 expected full year outcome. There's a lot going on in the external environment as we've just been talking through, you know, Manjari's question around the Red Sea, for example. So there's lots of things for us to sort of work through. But I think fundamentally, the medium-term growth expectations for pet sector, as Lyssa's outlined, you know, are as strong as they've ever been. Yeah. And that's the key point, you know? And we've got to work through this normalization. You know, as we go and trade over the year just gone, yeah, there is this normalization effect that we just need to think about carefully and make sure we build into the right targets. But there's nothing at the moment that tells us that the underpinnings of the market are any different than they've ever been. And when you think what we're doing with our digital platform, you know, don't forget, 15% of our sales are online, so it's like 70 stores worth, and we're opening those digital doors in the next two weeks to like a, you know, a mega refurb on 40, on 70 stores. The digital team won't like me talking about it that way, but it is a transformation in our digital platform and the opportunities that gives us. You know, we've got every reason to be really encouraged, but clearly, we want to see how that performs as well, you know, and that's ahead of us still. Great. Okay, thanks. And could I just... One quick follow-up. You talked about a year of normalization a couple of times there. Do you sort of see that year of normalization as being broadly aligned with your financial year, so FY 2024, or is it sort of from half year 2024 into half year 2025? Just interested where you see the timing of that year of normalization. ... But what's interesting, of course, is the pandemic broadly started two days before our year end. We remember back to... Yeah March 2020. So, coincidentally, you know, all the shaping of that, they're still playing through our numbers in terms of better acquisition, neatly fits into our thinking about our financial years. Just, it's just worked out that way. Cool. Thank you. Thank you very much, Sweet. Ladies and gentlemen, once again, if you have any questions or follow-up questions, please do press star one at this time. We now move to Adam Tomlinson calling from Liberum. Please go ahead. Morning, everyone. Morning. Hi, three questions from me, please. Just the first is on food, and just wondering if you could give a little bit of color on what categories are growing fastest there within food. So thinking about, you know, at the bottom end, the grocery categories, then moving up to the bridging and the advanced nutrition, some color on that will be great. And your comments around taking market share, you know, in which categories do you think you're taking share and from who? So that's the first question. The second question is just on vets, and noting your comment that a lot of the growth here is being driven by your ability to get hold of high quality new vets. So I'm just interested in your views on what the pool of vets that you still have to target looks like, and your confidence in continuing to attract that quality of vets. Then finally, a question on costs. I appreciate you're not giving overall guidance for FY 25 at this stage, but I'm just wondering how do you think about some of these increases that are coming through, be it wages, business rates, the recent increase in freight, and how those potentially balance against some of the tailwinds from factors like FX that you've highlighted? Thanks very much. Yeah. Thanks. It's a good set of questions. So, on food, we've broadly seen food in three categories: advanced nutrition, which is really the core business and where we have a very significant share. Bridging, which is somewhere between advanced nutrition and grocery, but a fast-growing category. And then grocery, which is more the entry. But even within grocery, we would have a slightly different makeup in that we would be selling a lot more big packs, bulk packs, than some of our competitors. All of them are in growth, and we're not seeing any evidence of trading down. So what we're not seeing is people moving from advanced nutrition into bridging or from bridging to grocery. We're probably not seeing quite the level of trading up either that we've seen historically, and I think as the consumer comes back, that will come back. So all of it is in growth, and we've got a lot of innovation coming there. Our Wainwright's freeze-dried that we just launched is now the biggest freeze-dried brand in the category. That's going really well. We've put more frozen brands, Billy and Margot and Bella and Duke, into our stores, and we're just about to launch with Butternut Box into 50 of our stores, which is opening up a fresh category, which is huge in the U.S., and we think will be really big here. We're also seeing cat advanced cat, so Seriously Good. Our relaunched range, which has got moist centers for cats, has been going really, really well. So there's growth everywhere, and some real, real standouts as well. In terms of who we win from, as you know, it's a really fragmented market. We've got, you know, there's no, there's no one who's got the market leadership or the market share that we've got, and we take a bit, really, from everybody. Second question you had was about vets and the pool of talent. So listen, our JV model requires a really, a really good vet, right? It requires somebody who has got clinical skills, customer service skills, team leadership skills, and commercial skills. Although we obviously provide a lot of the commercial, the back office, the technology, the HR, the finance support, so probably less so than if they were an independent practitioner. So we are looking for a really strong vet, and we won't lower our standards. But our growth ambitions only require us to find, say, 50 of those individuals a year. A lot of them come up through our practices and through share sales buy into existing practices. And we're seeing that pipeline of really high quality vets who are really keen to start up, a practice to buy into our unique practice ownership model, stronger than ever. When you look at the alternative, either go it completely alone, and have to do all of the stuff that we provide, yourself, or sign up to a corporate where you don't have the clinical and operational freedom. Our unique practice ownership model is super attractive, and we're seeing more and more that that's the case. People are understanding it better, and our pipeline is fuller than ever. So we're confident that we can source the 50 or so practice owners at high quality that we need every year, and we've got a really strong team behind that. Mike, do you want to pick up on costs? Yeah, let me pick up, Adam, on some of those questions asked about cost. So first of all, in terms of tailwinds, yes, you're quite right. You know, this year, you'd look at this year and think we've been held back a bit by FX, and, you know, next year, we've already brought out quite a lot of our FX at 1.26 compared to 1.19 this year. So that should play through, and that's good to have. Energy costs get better year on year, so that's another tailwind. You briefly talked about freight rates, and clearly, freight rates have come down, you know, massively since the peaks during the pandemic. Freight rates have lifted a bit recently from a pretty low base, by the way. You know, we were down at sort of $2,500 a container. Last year, the challenge in the pandemic is all the containers were in the wrong place. And that led to $16,000 a container. So I don't think it's gonna get that level, but clearly, it's something we're keeping our eye on. The other two big ones that have emerged as sort of headwinds that we need to tackle, like every other retailer, every other consumer-facing business, were the ones that came out of the Autumn Statement. So the National Living Wage increase for us this year, 9.7%, unmitigated, you know, we said before, that's GBP 60 million cost to us. Our normal planning assumption would be about half that, you know. So we're working through now how to mitigate the GBP 8 million, if you like, of extra National Living Wage. We've got quite a few things we can do there in terms of productivity, better technology, removing task from our store base. So we're making progress in our planning process over the next four to six weeks to build next year's budget. That will become a bit clearer. The other one in the Autumn Statement was on business rates. You remember what happened there was one of the reliefs that, you know, bigger retailers got was on, on business rates. That's now been removed in the Autumn Statement. For us, that's worth about GBP 2 million, you know, and for want of a better word, that's really a tax on, on retail, business rates in any other form. So again, that plays into the headwinds offsetting some of these tailwinds. The other big one for us, of course, is distribution. You know, after the challenges of the ramp up we did in our new distribution center in Stafford back in August, September, we're through those now, and distribution is operating at exactly the right service levels, in fact, better. You know, our gaps are great, our availability is good in store. That's helping drive our food volumes, but we know it's gonna take... You know, we have yet to fully optimize our distribution network. You know, all the stores are being delivered to out of Stafford, but our online business transfers into Stafford in the first half of FY 2025, and that will complete the optimization of our network, our distribution network. So we'll really see the benefits of that flow second half of FY 25, and in the first half, we'll be running, you know, in a, as we would expect us to do, de-risk way, our Northampton DC, and then carefully getting that transition right over the course of the first half of next year so as not to disrupt customers. We know that's a really important thing to do, and that's one of the big lessons from the ramp up we did at Stafford. So we'll look at an optimized distribution network second half, and we'll work through this net headwinds and tailwinds balance over the next six weeks as we build our business plan for FY 25. Great. Okay, that's, that's helpful detail. Thank you very much. Thank you, much, sir. Ladies and gentlemen, as a final reminder, please press star one if you want to ask a question. Thank you. We do not appear to have any questions coming in at this time. I turn the call back over to Ms. McGowan for any additional or closing remarks. Thank you. Thanks, everyone, for joining today. Really great set of questions. Really very much appreciated, and I look forward to speaking to you again at our next scheduled update towards the end of March. Thank you. Thank you.