Lockdown Dogs Drive Britain’s Hottest Retail Stock

(Bloomberg) --

Britons stuck at home because of coronavirus restrictions are spending more on their cats and dogs, helping make Pets at Home Group Plc the best-performing U.K. retail stock so far this quarter.

The stock surged as much as 24% to a record on Thursday after the company said momentum across its retail and veterinary operations continued in the eight weeks to Sept. 10, resulting in double-digit like-for-like growth in customer sales. It is up more than 90% since hitting a 2020 low when the U.K. went into lockdown in March.

“It would appear that pets, especially dogs, have been an important comfort and component of the U.K.’s mental and physical health during the pandemic,” Shore Capital analysts including Greg Lawless wrote in a note, upgrading the stock to buy from hold. “The shares have further to rise.”

The stock’s 56% advance in the quarter to date contrasts with the struggles of more familiar retail names. Marks & Spencer Group Plc is down 1.6% in the same period, while grocery giant Tesco Plc has fallen 2.1%.

Founded in 1991, Pets at Home listed on the London Stock Exchange in 2014. It sells pet products both online and in its stores, while its salons offer dog grooming, baths, microchipping and nail clipping. Although the grooming services have been held back by social distancing, food and accessories have done well, according to Peel Hunt analysts, boosted by increased pet ownership during the pandemic. Google Trends data show searches for the phrase “buy dog” jumped during lockdown.

“Much of the strength in sales is coming from new VIP members,” Peel Hunt analysts including Jonathan Pritchard wrote in a note. “It is unlikely that the momentum will stop completely.”

©2020 Bloomberg L.P.