Pet services business Mad Paws (ASX: MPW) is clawing its way towards profitability as revenue continues to grow in defiance of broader retail trends, leading the board to expect more than 145 per cent growth in sales for FY23 to at least $24.5 million.
On a pro forma basis the growth rate is looking to be in the range of 58-60 per cent, as the headline number will include results from Tweed Heads-based Pet Chemist Online which was bought last year for $25 million.
The Sydney-based company had a facelift this year with a new home page that showcases additional products and services in one place, while additional investments were made in marketing and new channel development.
The latter was seen through several new initiatives such as corporate sponsorship of RSPCA’s Million Paws Walk initiative in June, which raised funds to help rescue, rehabilitate and re-home pets in need.
Mad Paws claims initiatives like this helped increase conversion rates by 5-7 per cent, with average values continuing to rise and an improvement in the conversion of gross merchant value to earnings.
Other new initiatives include plans for sponsorship opportunities as a new revenue stream outside of Mad Paws' core marketplace and e-commerce offerings. At Pet Chemist, the team is in the process of moving to a much larger 2,000sqm distribution facility in Tweed Heads that is more than double its current capacity.
The company plans to significantly expand the Pet Chemist range with a 50 per cent lift, increasing by more than 1,000 products with a near-term goal to be in a position to offer 3,000 products.
"FY2023 has been a transformational year for Mad Paws as we leverage the pet industry tailwinds, successfully implementing our pet life cycle strategy," says Mad Paws CEO and co-founder Justus Hammer.
"Mad Paws is acquiring thousands of new customers every quarter, increasing our share of the pet owner’s wallet, while significantly improving our marketing efficiency and profitability. We are achieving these goals despite a challenging macro environment for many other retailers and demonstrates the resilience of the pet market.
"Moving forward in 2024, Mad Paws is seeking to deliver long term sustainable value by improving customer growth and retention, while at the same time building share of wallet. Mad Paws is focused on continuing to grow its share of the Australian pet market and achieving profitability in the medium term."
The company states it is on track for an EBITDA positive result in the first quarter of FY24, and is set to break even for the 2023 calendar year.
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