Pets at Home shares dive on profit warning and CEO departure

Pets at Home shares were down more than 16% on a profit warning, with CEO Lyssa McGowan leaving with immediate effect.

When a CEO leaves a business with immediate effect, you know something serious has happened. In Pets at Home’s case, a nasty profit warning has cost Lyssa McGowan her job.

Problems have been building up for some time and it’s clear that time had run out as far as the board was concerned. McGowan was given quite a bit of time to turn the business around, but her strategic decisions haven’t yielded the necessary success.

Prior to today’s news, £1 billion had been wiped off the value of the company since McGowan was appointed CEO designate in February 2022. That’s significant value destruction and shareholders will only be patient for so long.

Dan Coatsworth, investment analyst at AJ Bell, comments: “Someone must take responsibility and that inevitably falls on the business leader. The board might have felt they had no choice but to seek a new CEO, particularly if shareholders were disgruntled behind the scenes.

“Lyssa McGowan joined from Sky UK where she was the chief consumer officer. She was an expert in marketing and customer experiences, and in data and digital transformation – exactly the type of skills Pets at Home needed to thrive with its physical and digital stores. Unfortunately, market conditions deteriorated soon into her tenure, and it’s been an uphill battle for most of her time.

“Pets at Home is one of the UK’s biggest pet retailers. A nation of pet lovers should be keeping its tills ringing all day long, but unfortunately business hasn’t been as good since the pandemic boom.

“During the pandemic, people were bored at home, and we saw a big increase in pet ownership as furry friends brought a welcome bit of joy. The working from home trend also encouraged more people to get pets, as the daily commute could be replaced by a dog walk before and after work. With more people going back to the office in the past few years, pet demand normalised and that removed a major tailwind for companies like Pets at Home.

“Making matters worse was fierce competition for all things pet related. Names like Pets Corner and Jollyes have been grabbing market share and leaving Pets at Home trailing behind.

“Finding a new CEO won’t be easy. They will walk into a tough job and be expected to produce rapid results.”