Pets at Home Group PLC

LSE:PETS

Good morning, everyone, and thank you for joining our call. I hope you're all keeping safe and well. I'm Peter Pritchard, the Group CEO, and with me today is Mike Iddon, our Group CFO. I'm pleased to share with you our Q3 trading update for our financial year 2022. The strong performance across our retail and veterinary operations have continued into our third quarter, and we are firmly on track to report a record year of sales and profit growth. This is reflected in the update that we're giving today, and I am pleased to say that our performance continues to be strong across the group, demonstrating the ongoing success of our pet care strategy and the underlying strength of the pet care market. There are 2 key -- 4 messages -- there are 4 key messages to take away from today. First, we continue to grow our share of the U.K. pet care market. Our group 2-year like-for-like increased by 28.1% in the quarter, with growth in the 2-year like-for-like quarter reflecting sustained momentum across both chunks of our business. In Retail, it grew its like-for-like on a 2-year basis by 28.4%, and our Vet Group like-for-like was up 23.3% also on a 2-year basis. Our Retail sales growth was broad based across all key categories and channels, with store like-for-like of 21.1% and omnichannel revenue growth of 99.3% on a 2-year basis. In our Vet Group, like-for-like customers sales across our First Opinion practices increased by 29.9% on a 2-year basis, testament to the strength of our owner-operated model. Strong sales growth is translating into solid profit growth. And today, we're increasing our guidance on our full year profit before tax, which we now expect to be at least GBP 140 million. Second, we're continuing to see strong growth in new customers across all channels. Our Puppy and Kitten Club, which has grown by 60% year-on-year, engages with new owners at the start of their pet care journey and introduces them to all areas of our business. These customers are incredibly valuable to us, because not only do they stay with us for longer, they also spend, on average, 1/3 more than nonmembers. Our VIP membership now stands at a record 7 million, up 13% year-on-year or 34% on a 2-year basis. New client registrations across our veterinary practices remained strong, and on average, we've now signed up approximately 9,200 new clients every single week so far this year. Our Pet Care Plan continues to see strong growth, and we now have over 1.4 million subscriptions across the group, generating over GBP 115 million in annualized recurring customer revenue. This represents approximately 7% of group customer revenue. That's 200 basis points step-up in just 2 years. And we're very much at the start of this journey and remain excited about the growth potential in this area. Third, we continue to drive productivity gains across our operations. We, like many others, are witnessing a number of inflationary pressures across our operations. Whilst we're not immune to these challenges, we've been both proactive in managing them and offsetting them through a series of planned initiatives, targeting rent reductions, procurement savings and operational efficiencies across our business. Our strong, volume-driven sales growth and long-term relationships with suppliers have also helped us unlock both operational and purchasing synergies. This, along with our strong private label penetration, is enabling us to maintain our competitive price position with customers in a time when they're facing into their own inflationary headwinds. And finally, we continue to execute on our strategic investments, building capacity and capability across our pet care ecosystem, which is supporting our strong growth in customer acquisition and engagement and spend. We're progressing the digitization of our business through project Polestar, and we're now at the start to an 18-month road map. And in the coming weeks, we are launching the first of several releases, a single customer login functionality is representing the start of a steady flow of consistent improvements, enabling frictionless access to all parts of our pet products and pet services. We continue to make pet care even more convenient to customers through utilizing our pick from store capability. Now, this is enabling us to fulfill 1/3 of all online orders through our store network, offering best-in-class fulfillment for customers as well as generating operational efficiencies. We now offer customers 1-hour Click and Collect to our home delivery, next-day delivery and 9-day delivery. And we plan to roll this capability out to more stores in 2020 to ensure we continue to out-convenience pure-play providers. We continue to roll out our next-generation store with 2 new pet care centers launched in the quarter. And our store transformation program also continues at pace across our estate, having refitted 24 stores to date. We plan to accelerate the pipeline in the coming year. In our vet operations, early indications from our pioneering veterinary model, Pathfinder, are extremely positive, giving the confidence to roll out at pace across accompanying practices as well as working with our joint venture partners to implement it. And the development of our new storage and distribution facility in Stafford continues to progress well, and it remains on target to go live in 2023. So to conclude, our performance in the last quarter further demonstrates the strength of our unique pet care strategy and the long-term resilience of the U.K. pet care market even in times of increased pressure on customer spend. With the investments we're making in our capabilities and the strong leadership team we have in place, I'm really confident, as we finalize our succession plans, our next CEO is in the best possible situation to take Pets at Home Group through the next leg of growth, as we continue to build the best pet care business in the world. And I'm really pleased that whilst operations -- -- whilst we're operating the business successfully, we are able to continue to do the right thing by all of our stakeholders. We're progressing our Better World Pledge, having helped create a better future for pets, people who love them and, indeed, our planet. And finally, I'd really like to express my sincere thanks to our amazing colleagues and partners across the group. I remain incredibly grateful for their hard work and commitment in serving customer needs. So I'll stop there as I'm sure there'll be a number of questions, which Mike and I will be too pleased to answer. So I'll now hand you back to our call operator, Molly, to facilitate our questions.

[Operator Instructions] We will take our first question today from Jonathan Pritchard of Peel Hunt.

Two, if I may. first one on availability. Can you just sort of run this through by category? Is there any sort of sense to which you possibly may make great numbers but underpotentialize the opportunity on the basis of perhaps patchy availability out of your hands, of course? And then secondly, looking at inflation, the outlook for probably FY '23, do you -- have you a range of where you think inflation might settle? Are you already putting some price increases through? And how are customers responding to that?

Yes, sure. Thank you, Jonathan. I'll take the first one on availability, and I'll ask Mike to talk to inflation. Quarter 3 was actually -- was quite choppy. It was now, I think, for a lot of retailers as we all faced challenges around inbound freight from the Far East. And obviously, we know we have lots of issues in the U.K. regarding truck drivers. To some extent, we had some natural degrees of protection because 80% of our supply chain is sourced in the U.K. And we're a long-lead business. So we're not a just-in-time supply chain. So many of the issues that we faced actually were invisible to customers because we're able to protect ourselves. I think some of the challenges we faced in the quarter was demand was very strong alongside some of the supply chain issues. I think there were times that our availability would not be in the levels that we normally expect, but we're able to offset that through having additional choices and ranges. So I think while we say quarter 3 was -- it was acceptable, I think we left a bit of money on the table because I think we missed some availability challenges with customers. But as we've come through into the new year, I think a lot of those challenges have resolved themselves, and we're facing the new year, I think, in a much better place, where I think many businesses exited. So I don't think it was material for our numbers, but it was certainly one of those periods in time where it was -- actually it was very choppy and we had to be very agile to be able to respond to it.Mike, do you want to talk to inflation?

Yes. Yes. Picking up your question on inflation, I'll start first by just looking at the quarter 3 numbers and then turn to the year ahead. So in quarter 3, the vast majority of our growth has all come from more transactions. That's more customers shopping across a greater range of products and services. If you look at our unit price cost increases, price increases in the quarter, they're between 2% and 3%. So very, very low indeed. As we look ahead in the year, though, clearly the inflationary environment is getting tighter, and we recognize that. But it's going to show up in different parts of our business. So for example, on freight, which is well publicized in the year, we've incurred significantly higher, circa GBP 9 million year-on-year increase in freight costs. We're anticipating no change in that in the year ahead. So not getting any higher but certainly not getting any lower. If you look at something like energy costs, we're anticipating an increase in our energy costs, like many businesses, in the year ahead. But when we look to the supplier base, I think any conversation with our suppliers about passing on cost price increases have got to also include the fact that we put 30% volume growth to most of our supplier base over the last couple of years. And clearly, there's an efficiency saving that needs to be captured in any conversation around cost price increases. On the other hand, of course, we're taking a lot of progress to mitigate inflation. Our rents -- program of reducing rent is well established and will continue and with broadly the same level of rent reduction anticipated in the year ahead. But also, we're taking a really close look at all the product we procure, goods and services not for resale. And we've got some well-advanced procurement efficiencies coming through there. So yes, we will see some inflation coming through. But clearly, we're working our hardest to mitigate that and will always remain price competitive on our retail prices. I think that's a really important concluding comment.

Thank you. We will take our next question from Andrew Porteous of HSBC.

Congratulations on a good quarter. A couple for me. The first one is sort of building on that inflation point. I mean you talk about inflationary challenges, and it's clear that there are some sort of cost pressures in some areas of the business. But do you see it as an opportunity as well? Do you think you're relatively well set versus some of your competitors when it comes to that sort of input cost inflation? I think you talked to the 30% volume growth. And then I guess the second question was really around growth in the future, just some of that share of wallet opportunities you flagged before. Could you perhaps give us a bit of color on sort of the profile of new customers that you're seeing? Did they offer -- have you got higher share of wallet with those as they've come through over the past year? Or are they very typical customers that still present that opportunity for you to get them to trade up and gain share over the next 2, 3 years?

Great. Thank you, Andrew. Two great questions. I think you're right. I think on the inflation challenge, I think we actually are really well set, because I think one of the advantages we've got is the ability to use our network in quite a unique way to the fact we've been able to use stores as picking centers. Being able to offer 2-hour home delivery means actually we're able to capture more share of wallet and get more volume through. And I think of our store network as a fixed cost, or our labor costs in the store are relatively fixed. So as we can drive more sales through those units, broaden the services through those units, which, of course, have a really positive profit mix, I think we've got much more to play with them than some of either our pure-play competitors or, indeed, pure retail competitors. We've got more strings to our bow. And of course, we know the cure to many evils are sales because operational leverage becomes your best friend in an inflationary environment. So I think for us, we're really well set. And also, we were very proactive. I think many -- we read the tea leaves on inflation last year. So a lot of the programs we're in execution mode on now where we predetermined that we'll -- probably we'll be entering an inflationary year. And therefore, we're not reacting to it, we plan to respond to it. So I think we're probably, like everybody, not new, but I think we're really well set. And I think we're probably in a better position than many because we're prepared for it and obviously can pull more strings. So that's how we think about inflation. I think the growth in the future is really interesting. So one thing we're seeing? The growth of pet ownership. And I think the first thing is you should never mistake growth in pet ownership always with new pet owners. We've actually seen many of our customers acquire a second or indeed a third pet. But one trend we have seen this year is much younger customer become pet owners, and we obviously see that through our VIP loyalty data. And I characterize this, though. You might recognize this sort of people, even in your circles of friends. We see more 20-, 30-somethings who historically have been absolutely diehard people living in the office but now flexible working. And it's opened up that possibility to have particularly a dog in their lifestyle. What's really interesting when we look at our profile of customers is they are as valuable if not more valuable to us and some of our existing. So what we've seen happen if you look at our vet business, we now have a significant increase in younger pet owners in our vet business than probably our competitors. I think it bodes really well for the future actually because we know those relationships are very long and enduring with pets. We also know that our younger customers are more digital. And therefore, the more frictionless we are, that's good for us and, I think, good for them. But also, we know that, that population, which are more likely to run their lives on subscriptions and spreading their costs, so we've seen a greater uptake of those customers in health care plans and in [indiscernible]. We think they're already positive indicators for the future. But of course, for us, the most important thing that we just focus in on all the time is the absolute size of the pet population. That's what determines our market there because that's got bigger. All our focus really now is on deepening our share of wallet with those customers. And everything we're putting in place through digital services, connecting altogether pet care centers we know are all proven, underpinned by data, are all proven ways to grow our share of wallet with those customers. So we think we're pretty well set just to continue to execute on the plans we've laid out and to continue to deliver level of performance you've seen from us over the past.

We will take our next question from Manjari Dhar of -- or at RBC.

I just had 2, please. Firstly, on delivery from store, how does the cost to do this compare with delivering from the warehouse? What are the margins like for that? And then secondly, is there any more color that you can add on the learning from Pathfinder and the benefits that provides for that business?

So look, I'll take -- thanks, Manjari for the question. I'll take the question on delivery from the store and I'll ask Mike to talk about Pathfinder. So there's 2 distinct advantages on delivery from store. One is the cost advantage. So if we pick and pack an item from a store that goes within the locality, we actually bypass one of our courier's national hubs, which actually just means it's a straight cost pass-through. But actually, it's cheaper just to deliver from store as a consequence. And typically in a store, our labor tends to be more of a fixed cost than a variable cost. And therefore, there's an efficiency. That's the benefit. It's actually not the primary reason to do that, though. We see the primary reason really is one of speed and convenience. So by unlocking picking from store, what it allows us to do is make sure that last-mile delivery to a customer is as fast as it can be. So we obviously now have 1-hour Click and Collect in all our stores, but we were trying pre-Christmas doing 2-hour home delivery, working in conjunction with a local provider to do that last-mile delivery. So we think convenience probably becomes a more important factor necessary than cost. And then we're happy to take cost benefit, clearly. And our system is dynamic that it's now routing orders on the most effective way. But I think what it really allows us to do is if we think about Amazon and zooplus, they've normally won on the basis of price or speed or convenience. Well, we neutralized on price. Now offering 1-hour Click and Collect, 2-hour home delivery, same-day, next-day delivery, our ambition is to out-convenience pure play and, therefore, make their position actually quite challenging. And we think that's probably the more exciting part of that opportunity than it is necessarily just a cost one.

Yes. So Pathfinder, you asked a question about that, that was an operating model we first showed in our store in Handforth. And in fact, some of you on the call will have seen that during the investor visit we hosted back in October. And subsequently, we put Pathfinder into our Guildford store as well. But the results are very compelling, and we're convinced that the operating model this gives us will allot quite a lot of our capacity within our own vet operations. Fundamentally, what the model does that's being proven now to do is help make our vets more productive simply by taking away a lot of the non-veterinary type of activity they undertake with clients. So we've been incredibly pleased with the results. It's proven itself to be successful, and we'll be rolling it out across the rest of the business. I would say that what we've seen so far is obviously based on very few stores, so the benefits of it won't have flowed through to the numbers yet. But certainly, in the year ahead, it's one of our initiatives we think will unlock a lot of productivity in our vet business at a time when we all know that one of the constraints on growth is availability of vets. And therefore, making them more productive has to be a good thing to do.

We will take our next question from Matthew Garland of Deutsche Bank.

I guess just a follow-up on that last question. What, I guess, is the speed of rollout of the Pathfinder initiative across the store network? Can you give an idea of that over the next couple of years? And secondly, obviously very, very strong like-for-like store performance in 3Q. How should we kind of think about the range of full year guidance of at least GBP 140 million? And can you give sort of any indication around that accounting impact as well as the kind of impact of Omicron? And then, in terms of obviously the 7 million active customers that you have, do you have any details, I guess, around the opportunity for reactivation of customers? Obviously, you've got the benefit of being able to win new customers. But what's, I guess, the opportunity from customers being reactivated?

Yes, great. Thank you, Matthew. Look, I'll take the first question on speed of rollout. I'll hand over to Mike to talk about like-for-like, and I'll come back and talk about customers. So we're really pleased with we've seen so far in Pathfinder. We replicated it in GuildfordPet care center, and we currently have plans to roll Pathfinder to our 50 company-owned practices in this coming year. We're now working alongside our partners to take them through the operational impact of Pathfinder, and we've got a number of partners who are actively now working towards that. And we'll be working with them over the next year or 2 to show the learnings and do the rollout. And this is one of the real benefits of having company-owned practices because we can be very experimental on some of these things and refine models before we take it to a JVP, who will have an existing operation which is running and then, well, we can manage to help them in the migration. So by the end of the year, as I just said, you'll see a lot of company practices operating the Pathfinder model, and we'll advance on JVPs as we move forward. Mike, do you want to talk about like-for-likes?

Yes. So Matt, to your question around GBP 140 million in quarter 3 and what we'd have seen before COVID, I think the important point here is our upgrade is all about our trading. It is stronger trading, more customers or sales that have led us to upgrade properties to at least GBP 140 million. We do know, though, in quarter 3 Omicron, the new variant, did have an impact to our business. We've already -- Pete, sorry, talked about availability, but in terms of colleagues having to isolate, us managing vacancies, disruption to customers. So we would have been upgrading by a bigger amount today were it not for Omicron impact in quarter 3. I'm not going to give you a number for that. But full year, we estimate the impact on our business of COVID in terms of the revenue and cost impacts is probably around GBP 6 million. Now at the beginning of the year, we anticipate it being about GBP 9 million. But when we gave our update in November, we set it around GBP 5 million. It's probably going to be around GBP 6 million when you take into account the trading through the new variant in Q3. Your second question was around store like-for-like growth. And in the quarter, we saw strong store like-for-like growth of 7.4%. And now we would plan going forward on our stores continuing to have strong like-for-like growth. I know Peter has just spoken about our fulfillment and picking from stores. But I do think a big part of our planning is that we are planning for our stores continuing to be like-for-like clearly not at the levels we've been seeing. So our planning assumptions on like-for-like growth across the business in the year ahead will clearly be lower than we've seen in the year gone. But still -- we're still planning our stores to be in positive like-for-like.

And I'll talk about the customers. You're right, there are 7 million active customers. One of the most important things you want to do first, Matthew, before you focus on reactivation is actually predicting when somebody is going to churn. And one of the things we worked on last year with our data teams and our data scientists was we did a lot of work trying to predict when somebody is likely to churn. And so we modeled a series of behaviors and spend patterns, and we put in place some trial work on intervening with customers with either offers, or it being not an issue, stop the churn. And actually, that was very successful to the extent that it's now an always on piece of work that runs in the background in our loyalty program driven by, I think, the artificial intelligence and algorithm one could possibly learn to adapt. So we focus on churn before we focus on reactivation. We do have a reactivation campaign, though, and we have an approach where we identify customers where the churn will not be from something which is something like a debt. And therefore, actually, you don't want to reactivate a debt. Nothing's going to happen. You just make people very happy. But what we do have is a campaign where we think we can try and reactivate customers. And actually, if they don't respond, we actually take them off the club altogether. And therefore, we focus in on core. Both of those have been successful and have been -- the underpinning is actually of some of the strengths we've seen in our customer numbers this year because we've learned how to predict and how to intervene and keep customers loyal to us. And that actually will continue to be an underpinning sort of program moving forward.

Great. If I could just have one quick follow-up question, I guess, in terms of inflation. So in terms of obviously your comments around price increase, I guess, of 2% to 3%. In terms of, I guess, the opportunity in the vet category where maybe there's more opportunities for price inflation there, what, I guess, do you see as the opportunity from sort of that perspective going into next year to continue to drive growth...

Look, I think...

Or do you see as an offset?

Actually, I think we're going to be really sensible when it comes to that business because I think there's a real competitive opportunity here because we know for a pure-play veterinary business, their exposure on particularly wage inflation will be very painful for them. And that can only result in price increase declines. And I think given the nature of many of those who've been acquired at very high multiples, inflation, I think, becomes the basis of actually their business plan. I think for us, we've got a very different model. We have a company-owned model and with owner drivers driving a completely different behavior because your primary vet is your owner, not just your employee. And therefore, as -- we've actually been keeping inflation quite tightly in the veterinary business because we also understand that actually, it's -- we have been very successful in driving new client registrations. And often, when a client is potentially thinking about that, they'll wring around particularly a known procedure like, for example, spaying of a dog. And therefore, we'll be keeping our price actually very competitive. And therefore, for us, we actually think we have a competitive advantage. We're not reliant upon inflation in the veterinary business, I think, the likes of our competitors. And we're going to keep it very tight. And also, we want to keep our ownership pretty affordable because we know that keeps more value inside of our total ecosystem, another reason why you want to be a Vets4Pets client as part of being Pets at Home customer. So I think a [ personal plan has given ] a bit of our time, frankly.

[Operator Instructions] We will take our next question from Tony Shiret of Panmure Gordon.

Short questions from me. The sale price inflation, the 2% to 3% you mentioned, I think Mike said that was the Q3 figure. And I just wondered if you could then tell us what you anticipate that figure to be in the coming year, what your indications are going forward for the sale price inflation and -- in retail and whether you intend to pass the supplier prices, right, straight through with no impact on gross margin. And the second question is about data and possibly more a sort of thing that you might consider for the prelims. But in terms of the sort of opportunities between the 2 parts of the business, the vets and the Retail, bearing in mind that the vet business is sort of a bit more complex than retail. Is there still -- are you still further back on the path in terms of acquiring the data and utilizing it?

Look, Tony, I think, as Mike said, relatively, our price inflation to customers has been relatively low. And actually, our ambition for this year is to keep that as low as physically possible to make sure that we have a very strong position for our customers. And classically, particularly in food, we have -- we do an annual negotiation with most of our suppliers, typically about now actually. And the conversation we have with supplies, as Mike said earlier, is one of undoubtedly, they have faced some cost headwinds in terms of energy and labor. Typically, pet food, by the way, is highly automated in terms of its production. So labor is a less important constituent part of the final finished product. Raw material tends to be the bigger driver. And we watch all -- we'll watch raw material pricing very carefully. And we understand intimately how pet food is made, so we also understand the impact on costs. But the offset to that is most of our suppliers have enjoyed 25% to 30% volume growth. And we all know that in a factory environment, operational efficiency is actually your biggest friend. So we're in a situation where we will do everything we can to protect customers from inflation, full stop. And we're in the case where we have accepted price increases from suppliers. We then consider whether it's competitive to pass them on to customers or not because ultimately, we keep our prices competitive. So I can't give you a precise percentage because we don't know yet, except for the fact that some of the outputs will be we'll keep our prices competitive with Amazon and zooplus, that's a given, and we will do everything we can to minimize our pass-through to customers and play really hardball because that's our job for customers, to make sure we keep products really affordable for them. And that's our job. And believe me, you don't want to meet one of our buyers down at the [indiscernible] people.

But I presume it's going to be higher than 2% to 3%.

I -- no, I actually don't know yet because those conversations are all live. But I think what we've got to do is just keep them as low as possible, actually, because customers have got a lot to deal with. And the last thing we want them to do -- we don't want to add to their woes, frankly, so we'll -- we're going to be as hard as we possibly can be. And often, in these situations, it's where you can actually become even more competitive because you've been able to protect customers from inflation. And that's our starting point. We're not in that place. We don't think the natural pass-through should be to customers. It's the very last thing you do rather than the first thing that you do.

Okay.

I think on data, yes, you're absolutely right, we -- the first benefits of all of our data from both parts of our business, it flows straight through to our cloud platform. So we're already capturing all that data. And it flows into our CRM campaign. So a lot of the things we've already talked about actually are in flight and are actually landing now. I think for us, the opportunity is less about the data. That's actually in really good shape, actually. It's now about the digitization of the customer journey to make sure you're serving up that data and the next best opportunity to a customer at the most appropriate time. And for us, this is why Polestar becomes so important, because we spent the last 2 years getting the data into great shape in the platform with all the right capability. What you're now going to do is turn that data into something which is executionable. And that feeds through into Polestar and personalization. So what it allows us to do for the customer is serve up the next best opportunity. So as we unveil Polestar, what you'll start to see is how that data flows through into providing personalized recommendations for the customer on their next best step. With that, we recognize into a time for inoculations, we'll recognize that you don't register with our vets, doing a free checkup. That's how it's going to flow through. So our focus now goes into the execution of that through both CRM and our digital platforms. And for us, again, what you've seen for the last few years is doing some really basic stuff but really well on data. That will still be the cornerstone of most of what we do, by the way, but we'll start to get more and more sophisticated and more and more personalized in the execution of that by having that digital interface.

But that doesn't a vet do that anyway, I mean, some of that stuff? These vet businesses are sort of relationship businesses anyway without your data.

Yes. We -- I think...

So what's the incrementality?

Yes, there is actually because the vets do very basic things very well. So they'll remind you that a vaccination is due, which is fine. We're starting to use breed and life stage. You can start to intervene at a more opportune point. So knowing that certain dogs have certain issues at certain life stages by providing content and actually providing a checkup on those specific issues, you get more sophisticated. And that's what we're learning. Because actually, I think a lot of the stuff that happens today, we will just digitize anyway: your automatic reminders, booking your appointments online. That will remove friction and actually will increase traffic. Our ability now to personalize that even further to recognize that if you've got a Labrador, you got problems with their hips and joints. It's really common. Check up early, being preventative, getting them on preventive medication will alleviate a big vet bill. That's where -- this is where our data moves into place, which is really helpful for customers and drives revenue. And that's the place that we're going to.

And we'll take our next question from Charlotte Barrie of Berenberg.

I have a couple ones, slightly longer and one very short. Firstly, just on the vet side, obviously still very strong on a 2-year basis. But I guess some might be tempted to look at the headline 1-year number and see this as kind of the inevitable beginning of a slowdown. Are you able to give any other comments or anecdotes just to demonstrate how much of this is simply a function of lapping those strong comps from last year and actually the business is still experiencing abnormal growth? And how much is really a slowdown in momentum? And then secondly, do you have kind of a formalized target for the retail store refurb program?

Sure. Well, look, I'll take the refurb one, then I'll hand it over to Mike to talk to the vet numbers. Our estate actually is in pretty good shape. A lot of it actually is relatively new. So we anticipate, over the next 5 years, about 350 of our stores will go through what we call our pet care conversion program. And that will be everything from sort of one touch because actually, the store estate is in -- the store, the physicality, is in a good place. And the fact is, we'll soon be landing some new features. For example, our Click and Collect base or our service desks. Through just some older stores that haven't had an investment for 10 years-plus, they have more extensive plans. So for us over the next 5 years, we'd anticipate that actually 350 of our stores will go through a refurbishment program built into our CapEx program. And it means that we will have the best features appropriately sized at each of our store locations moving forward. And we think -- I guess COVID slowed down our ambitions that we set out 2 years ago. And actually, it's been typically just very difficult to go and give it to get to work and to go into stores that was not the right place to do it. But having restarted that program last year, we're happy again about the performance we're seeing from that in terms of retailizing that space, maximizing services and driving more revenue from the stores. And we're as committed as ever to continue to roll out that program. So Mike, do you want to comment on that?

Yes. Thanks, Charlotte. And yes, I guess you're referencing the 4% 1-year like-for-like growth in our vet group in quarter 3. I think that's why it's so important to look at the 2-year like-for-like, because our quarter 3 last year for the vet group was 17.8% growth. And what happened, of course, was a lot of the restrictions the RCVS placed on that group in the first half of last year were relaxed and we had really big bangs in quarter 3. So we're trading over that comp, which was artificially high because of that impact. So it's important to look through to the quarter 3 2-year. And when you look at that, that group is 23.3% compared to 21.2% in quarter 2 on a 2-year basis. Actually, quarter-on-quarter, it's strengthened. It's worth a lot -- just pointing out a couple of other KPIs in our vet group over and above sales growth, which are really good indicators of the progress we're making. One is the fact that we gave the cash target. We've always said that we'll get to GBP 60 million. We've made great progress against that. And we'll see at the May update just how close we are now to achieving that cash number. And the other side of that are, of course, operating loans. Operating loans have come down a lot over the course of the year. So that's an important measure, if you like, the cash performance of individual practices. We're -- a couple of the references. One is our -- number of our practices that are still in the immature stage. So let's that's practices under 8 years old. So they're 40% of our practices. So we're going to have the benefit of accelerated growth still to come as those practices go over the maturity curve. And that, obviously, is the capital and the operating cost to release that already invested. But that's all growth still to come. And the numbers of profitable practices, and remember that we plan them to be unprofitable in the first 4 years of opening, is -- has improved significantly, often higher quarter-on-quarter. So we're making great progress across lots of metrics. Do not read into that 4% that our vet group is at all slowing down. We talked earlier on one of the other questions about Pathfinder. And we know that's a way of unlocking a lot of vets' time to make our vets more productive. And Peter preferred to have speed at which we're going to roll that out. So we've got a lot of growth and profitable growth still to come out of our vet group.

There are no further questions at this time. I will now hand back to Peter Pritchard for any closing or additional remarks.

Great. Thanks very much, Maya. And thank you very much for your time and, again, some really great questions, we really do appreciate them, and, more importantly, for your continued support of our business. And I wish you all a great day. Thanks very much, everyone.