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Good morning, ladies and gentlemen, and welcome to the Pets at Home Q1 trading update for financial year 2021. Can I just remind you that this call is being recorded. [Operator Instructions]. I'm now delighted to hand you over to Pets at Home's Chief Executive, Peter Pritchard. Please begin your presentation.
Thanks, Millie. Good morning, everyone, and thank you for joining us to discuss the Pets at Home Q1 trading update for financial year 2021. I'm Peter Pritchard, the group CEO. And with me today is Mike Iddon, our group CFO.Our first quarter covers the 16-week period from the 27th of March till 16th of July, beginning a week after lockdown in the U.K. So our entire quarter was impacted by COVID-19. However, as an essential business, we've remained open throughout the pandemic. This has allowed us to gain valuable insight into customer behavior and adapt our operations to a new normal.We believe to have a complete picture of the impact of COVID, it's really helpful to step back and talk to a 20-week view of trading to the final 4 weeks of last year, pre-lockdown, and then the quarter 1 of this year, which, of course, takes in the hole of lockdown.As we've previously described in the 4 weeks prior lockdown, retail customers bought more merchandise in effect filling their cupboards. In this period, retail like-for-like was 36%. However, entering Q1 in the first 8 weeks of the quarter, we saw the initial impact of lockdown. As [indiscernible] to advise people to stay at home and only undertake essential journeys, and that resulted in negative group like-for-like, and it was driven by 3 key factors. Firstly, we saw the unwinding of the [customer pivot sale], worth around GBP 20 million worth of merchandise sales. Secondly, in addition, we temporarily paused our grooming and pet sale operations so we could reengineer them to the social distancing guidelines. And finally, in our vet group, we implemented all the guidelines that Royal College of Veterinary Surgeons, which precluded all but emergency health care, meaning we saw significantly reduced customer sales across First Opinion practices of around 30%.Let me move into the second half of the quarter where we've seen sales momentum return stronger and faster than our scenario planning had anticipated, and that was across all parts of our business. In retail, with COVID field now used up, customers returned to make food purchases, but we were also really encouraged by a strong pickup in accessories. In particular, our puppy and kitten ranges have performed well as new pet owners visited for their first big shop. The step-up in store like-for-like sales were supported by the reinstatement of grooming services and pet sales, and that was made possible by new COVID safe operating procedures.As the RCVs guidelines gradually eased and combined with our model of an owner-driver operation, like-for-like sales growth and First Opinion rapidly improved, and we were up 4.6% in the second 8 weeks of the quarter.So let me be clear, I've been talking about customer revenues in the practices themselves because we didn't have the best read-through in terms of customer behavior. So looking through the whole of COVID from the start of March, end of Q1, like-for-like custom sales have actually grown 3.5% year-on-year for the group as a whole. And in retail, the business is actually performing stronger than the prior year with a like-for-like of 7.5% versus a run rate pre-COVID of 7.2%. Our omnichannel business has contributed significantly to that performance, with online order volumes remaining materially elevated and sales up 65% over that 20-week period. Our stores have also did a bit of robust 1.6% like-for-like growth where merchandise sales have more than offset lost sales from grooming and pet sales of approximately GBP 7 million.In First Opinion vets, we've seen a robust recovery and are now performing at normal levels, supported by the increasing of telemedicine, and that's allowed us to triage existing clients as well as acquire new ones, plus we also launched a new delivered to home service for health plan medication, which has been particularly popular with our clients. We've continued to drive strong new client registrations as well as grow the number of clients who have a complete care health plan. Specialist hospitals have also recovered well and are now operating at normal levels, too.We've been really encouraged by the performance of the business, underlying the strength of our combined pet care model, our agility to respond to changing customer needs and the favorable trends within the pet care market. As people adopt new attitudes to work and leisure pursuits, we are seeing signs of increasing pet ownership, having witnessed increased levels of VIP puppy and kitten membership and new client registration in our vets. We believe that this, alongside the longer-term trends of humanization and premiumization, should help drive future growth into this market.Now, of course, it's far too early to extrapolate the recent rate for the balance of the year given the material uncertainties that exist. And even overnight, we're seeing a significant announcement with the lockdown in part of the north of the country. However, these attractive market dynamics, together with our unique pet care model, strong liquidity and a robust balance sheet give us confidence to progress investment and emerge an even stronger business.I've previously spoken about our ambitions to leverage our customer data to better serve customers' pet care needs. And I'm pleased to report that we're approaching a significant milestone of all of our data moving under our control from third-parties. So from the time that we report our interim results, we will, for the first time, have a single view of our pet care customer. Combined with the investment we've already made in building a dedicated data team, we're making really good progress with our plans. We now have 5.7 million active VIPs, a number of those buying both a product and a services grow at 8.5% year-on-year. But let me be clear, we still have a really big opportunity to get more of our shoppers to shop across our entire ecosystem, and that's what our data focus will be focused upon delivering.Keeping our business efficient and low cost, of course, remains a priority. We've recently appointed and experienced Productivity Director to lead a number of initiatives to support investment in growing our business capabilities. We've also accelerated our program of lease negotiations with landlords where our strong covenant and commitment to paying rents in full throughout the crisis has put us in the strongest possible position to agree to the best terms moving forward. And today, we've laid out our plans to make a significant investment in our omnichannel business by consolidating our legacy infrastructure and moving to a single site distribution center by FY '24.We plan to build a flexible, efficient and modern facility that allows us to grow with the changing needs of our customer. This investment is being made alongside more immediate initiatives, such as enhancing our digital platforms and creating a new click-and-collect service, allowing our customers to shop how they want to, and for us, to best decide how to fulfill their pet care needs.And finally, it goes without saying that I would like to sincerely thank each and every colleague across our business for their commitment over the last few months. I'm so proud of the way that they've responded to such challenging times, and continue to serve customers and their pets in whatever way they can. They really are a truly remarkable set of people who are so dedicated to serve UK's pet owners.So I'll stop there. I'm sure you'll have a number of questions, which Mike and I will be pleased to answer. So I'll hand you back to Millie.
[Operator Instructions] Our first question is from the line of Geoff Ruddell from Morgan Stanley.
Can I just ask 3 quick questions, please? The first of which is, how should we think about gross margin trends in your retail business in the last 16 weeks, given, I imagine, some of the product category mix is quite different and obviously, much longer stronger online penetration? Secondly, are you seeing any signs of consumers trading down just in terms of the economic environment and what might be coming? And thirdly, could you put -- are there any figures you can put at all around the comments you were making about potential increases in the pet population? So how much your puppy club is growing, et cetera. Just if you have any view yet as to how much the pet population is likely to increase over the next 12 or 24 months? That would be good.
Yes. Well, look, I'll hand over to Mike first to deal with the gross margin question, and then I'll talk about mix on the pet population.
Yes. Geoff, your question on gross margin percent in the retail business last 16 weeks, there's 3 trends playing into that. The first is, obviously, omnichannels grow at 71%. Food is a stronger participation in omnichannel sales, and it's lower margin than accessories. So you do get a mix impact on gross margin of that shape. Second dynamic is actually, across the quarter, we've seen very strong performance in accessories, partly driven by customers setting up as they acquire new packs and initial setup to support to pack those pack. Accessories has a higher margin than food. That will offset some of that mix impact from omnichannel, not completely, but does help mitigate it. The third is in our grooming business, which does go into our retail gross margin, the best way to think about our business is there's a service we provide from the colleagues. This income we take in terms of the grooming fees against which we charge the payroll, and that's the gross margin. Then as people are saying, that business is being constrained. We've lost sales as a consequence of being closed, but we continue to employ and pay those colleagues. So their payroll cost is hitting our cost base. It also goes into our gross margin. So that's a short-term feature in the first quarter. Balance of the year, you'll see that continue because we're saying today our grooming business will probably operate at 75%, 85% of capacity, but it's still going to be constrained in the balance of the year. So they're the 3 points that I make to respond to your question on gross margin.
I'll just pick up questions about consumer trade down. The answer in the short term is no pet products tend to be relatively low price points anyway, particularly in accessories that are actually very accessible. So we haven't seen any signs yet. I think we would be very cautious out in the future because, obviously, I think as we look at the economic outlook towards October, November. And clearly, with furlough coming to an end, I think we would be super cautious about trying to anticipate how that's going to play through, but currently, no consumer trade down.And on the pet population, I think, obviously, the most and most important factor here is we got more people now at home, and they're likely to remain at home as they work from home, and that's obviously been a very favorable trend for pet ownership, and more people have considered. It's still very, very early days, and there are very few national statistics. But I point to 3 things that we've witnessed is we saw the [indiscernible] web searches for finding breeders was up over 100%. So people obviously are looking and observing. But bear in mind, generally, you can't create any pet ads in that there's a long breeding cycle. So I think that trend of people researching is a good one. We've seen a material step-up in puppy and kitten membership over the last 8 weeks, and that's a good proxy for people coming in. And for us, that's really important because puppy and kitten will have the lifespan between 12 and 20 years. So that is a good indicator of value growth.And the third will be new client registrations in our vet business, which over the last 8 weeks have returned back to normal levels and slightly elevated which, again, is another good proxy for people registering with a vet when they get a new pet. I think what's interesting as we look at the age profile of those new registrations, we've actually seen quite a strong profile to slightly older pets, which could indicate 1 of 2 things, either people will be homing pets from rescue centers or indeed, we've seen some switching behavior as some competitors maybe have closed down. So it's still quite early to try and read through, but the trends are certainly positive.
We will now take a question from Andrew Porteous of HSBC.
A really good performance as well through Q1, so well done. A couple of questions from my perspective. CapEx, obviously, you outlined the plans today around the online investment. Could you -- it feels like with that and the store refresh program, you've probably got pretty good line of sight on CapEx over the sort of the next 5 years. Could you talk about how you sort of see that evolving annually and sort of what the key building blocks there are to think about? And then, I guess, linked to that, obviously, through lockdown, plans to the store refresh program have been a little bit up in the air. Could you update us as to where you are on that? And perhaps if you can give us any indication of how the new stores are performing relative to the sort of the legacy stores?
Sure. Look, I'll hand over to Mike to talk CapEx, and then I'll talk about the store refresh program.
Yes. So I mean our plans of deploying CapEx remain in line with our strategic priorities. I think we've looked at 4 things on that, Andrew. First of all, we're going to spend CapEx to support our digital and data agenda, and we're talking quite a bit about the progress we're making on that today.Secondly, we're investing behind the vet group, particularly in the specialist division. We've got our new center opening in Scotland later in the year, and we've got a plan to invest significantly in our largest specialist hospital, which is Dick White Referrals.The third area we'd spend our capital on is converting stores into our new pet care format. We've done 18 of those so far. Now we've paused that, understandably as we've gone through the COVID crisis. But clearly, that would be our plan to continue to put additional services into stores.And the fourth area is to build out and invest in infrastructure. And today, we're announcing the new DC we're going to open. Now that DC we'll open in 3 years' time, we'll open in the summer of 2023. But that DC will help us manage the growth we're seeing in the business, our projected growth at that point. It will also help us achieve operational efficiencies. It will be more automated than the 2 DCs we have today and will enable us to serve customers better going forward.So we're more confident as we've come out of the quarter. We're going to invest some of our upside back into the growth of the business. We think it's the right thing to do. But of course, we'll always be very disciplined with our approach on capital. And clearly, it will be returns-driven in terms of how we prioritize.
Thanks, Mike. In terms of the store refresh program, we've currently completed 18 store refreshes. And obviously, we have to pause and have continued to pause through COVID. We do have a number of new -- a small number of new store openings planned for this year and some recycling, and then we'll all open in a new refresh -- the new refreshed store format. As soon as we're able to do so, we plan to continue with our refresh program. We're obviously taking a cautious approach at the moment, but that shouldn't be read as we're going to start ask more about our ability to execute. And I think it reinforces for us as we look at the performance of refreshed stores, where we focus on building out our services, particularly around vets, subscriptions, click and collect. These are all really important parts of our store refresh program. We think they're as important moving forward as they have been through lockdown. So we're pleased with the performance we've seen, it's in line with our expectations. And I think it sort of demonstrates to us is an omnichannel approach is the right in the winning approach. Customers are shopping in a lot of different ways. And as we're adjusting our store format to reflect that, we think that's actually a really positive movement forward still for us. We're still very encouraged and committed to doing so.
Just can I just come back on the CapEx point again, should we still think about CapEx as sort of all these plans within the sort of GBP 40 million, GBP 45 million that you normally run at?
Yes. I think towards the top end of that, Andrew, with the GBP 45 million. I mean, we referenced the GBP 48 million today in the -- for the fit-out of the new stat at DC. Clearly, we'll look closely whether the best way to fund that capital will be through a sale and leaseback or similar funding arrangements. So that GBP 48 million will be an addition to that GBP 45 million. So a normal run rate, GBP 45 million, that GBP 48 million is in addition, but we look to see how best to fund that really going point of view. Highly likely, we'll do what we do today with that type of capital in automation equipment or IT tracking where we do leases. We'd probably plan to do that.
Our next question is from Jonathan Pritchard of Peel Hunt.
Just a question on market share. I know data is still on the ground. But your sense of the new VIP customers you have, obviously, a good stock of them are going to be brand-new pet owners. But do you think you're perhaps winning from the specialist or winning from the supermarkets? Or is there any sort of trend you'd like to pick out that you might sense?
Yes. Thank you, Jonathan. I'll pick that question. You're right. Market share data in this market is really scanned. So it's very hard for us to give you a qualified view. I think what we've seen through the whole of COVID is people have gone to brands that they trust. And never has it been more important to deliver trust, particularly in terms of safety, safe shopping environments and doing the right thing for your business. And I think we're very well positioned. And that's why I think we've seen a strong response from consumers. I would point to 2 things. I think we've got some other indicators. I think we saw zooplus recently report on market -- on their position in the U.K., I think they talked about 20% growth in the market that will play comparable to our 65%. So I think I'll probably suggest we probably gained a bit of share. And our overall number, if you read through, is 7.5%, and we think the market is growing at sort of half that level would suggest we're probably in gaining share across the piece. And I think the fact we've been open national distribution, omnichannel means we've had more opportunity to serve more customers. So without giving you a qualified guess, I think the indicators there would suggest that we're probably on the winners' list rather than the losers' list.
We'll now take a question from Owen Shirley from Berenberg.
I was going to ask one on market share. So just 2 questions to me, if that's okay. The first was on the Stafford facility. If you could talk through what it will give you other than just more capacity? Also any kind of color on the level of technology that you're going to be stepping up to? And also any indications on ROI on that CapEx? And then the second question was, when you've alluded to kind of set-up costs for customers doing a big up in-store when they've just got a new animal. Is that worth stripping out at all? Is it a meaningful part of the like-for-like sales growth in recent weeks?
Okay. Owen, two really good questions. Let me talk about Stafford first, and Mike, please jump in if you -- if there's something that I miss. The most important thing around Stafford is obviously, we're consolidating 2 DCs into 1. And the most important word I'd use would be flexibility. We can see the way customers are choosing to shop evolves and continues to evolve. And by having your stock in 1 location, it means we've got maximum flexibility to decide with us of those direct to house or goes to a store. In the RNS, there's another really important piece that supports the Stafford facility. So we talked about our new order management system. And let me just bring to life what that allows you to do because it complements Stafford beautifully. Phase 1 of our order management system allows us to look at customer order and allows us to facilitate a really great click-and-collect experience. Phase 2 allows us to look at a customer order and say, where are you best serving that order either through your centralized facility where we pick and pack and dispatch to customers' home or indeed serve it from a local store and pick, pack and dispatch it to customers' home, too. So that flexibility point of order management system and a new single distribution center ineffectively means you don't have 1 DC, you have 451 DCs. So flexibility is crucial, we believe, moving forward, as we see customers changing the way that they shop, and that gives us the best ability to respond.In terms of tech, we are taking very much a proven approach to the technology and the automation in this DC. Our operations are relatively straightforward, are relatively simple. We deal with quite a lot of bulk, which doesn't always work very well in an automated environment. But those things that can be automated to give us maximum efficiency, we will do so. We've got a lot of experience recently in Northampton. So we're working on what works and what doesn't work. And that's given us a lot of insight to how we lay out our new DC. So we're not going to be in the Ocado robots approach, that's not our business. But we'll use sensible technology to give us proven efficiency.And in terms of the ROI, you can [indiscernible].
So the way to think about the financial benefits we get out of that is 3 types. One is that DC will be more operationally efficient than running 2. The automation we'll put in will enable us to be more efficient with our pick and our fulfillment. The second benefit we'll get was one that Peter alluded to, the order management system will be more efficient use of stock, management of our stocks and working capital benefits. And the third is, of course, it will be a major enabler of our growth in terms of sales. And so if you take that together, we target our guide rail for investing capital is to achieve circa 18% cash return on invested capital overall of our capital, and that will include the investment we make in our new DC facility.
So let me pick up the second part and set up costs. One of the really lovely things we like when we see new pet owners is they have to equip themselves with all the things they need to welcome the new pet, whether it be fish, obviously, you need the tank, if it's a dog, you need your beds and probably just ask Andrew with HSBC, he'll tell you how expensive that is to do. You need a lot of stuff. And we like that, obviously, because it tends to be much more accessory based and that's one of the things we've seen in our quarter 1. So it's always a really good proxy for those customers. We would never break out in such a way. Obviously, we just reported food and accessories. But definitely, it's a one-off benefit that you see. I think the interesting thing will be, as we go into quarter 2 is actually, if there's a continued new pet acquisition, we'll see that as we move forward, obviously, hard to predict. But it is a factor of our business, and it's always been omnipresent. It's always there. I think what we'd have seen at this point in time is an elevation across all pet types.
[Operator Instructions] We'll now take a question from Simon Bowler from Numis.
Just 2 for myself, if okay. First one, kind of hope to be quite short with just can you give some color on the timing around the Phase 2 implementation of your order management system with the kind of fulfillment from store potential? And then the second question was just around telemedicine, which is obviously kind of mentioned within the statement this morning again. Just wondering if you could just add a little bit of color on how you're thinking about the implications of that for total customer spend or average spend or cost efficiencies in practices, all those sorts of things.
Yes, sure. Look, our order management system, Phase 1 is very much focused on click and collect. And we've obviously now procured our software, we're now in our implementation phase, and we launch our first version of click and collect to consumers in the autumn, and that's our first focus. We then work on the second stage, which is the ability to pick, pack and dispatch from store. And that's very much for us a next year opportunity. So we'll see it phase into FY '22. Obviously, the biggest opportunity for us is click and collect. It allows us to divert an order from a centralized facility to a local facility. And obviously, the cheapest way of getting an order from a customer is going to go and collect it in the store. We know that's something actually which customers want to do, and it's not a service we currently offer. So it's a win, I think, across all parts.Telemedicine is really interesting, actually. So for those who are less familiar, telemedicine goes in 2 forms, either through telephone consult or through video consult, and we have both facilities available to our practices. The RCVS do have quite clear guidelines around what you can and can't do, and therefore, we operate within it. I think what we've seen is it's opened up a new channel of convenience. And I think particularly for a lot of consumers who have a degree of a worry, but may not need a full-on consultation with partners, that's proven to be very beneficial. And it's actually very efficient for a partner because you effectively see more clients very quickly. And obviously, you don't have to worry about social distancing. The RCVS are due to update their guidelines again because it was a temporary move that they gave. And obviously, we'll wait and see how they adopt. I suspect it's probably here to stay. It's really helpful. I think it's helpful to clients and it's helpful to the partner.I think the more interesting thing for telemedicine for me is how you just turn it into more of a service. And the way that we think about it, it's more about how do we incorporate this into our VIP membership. So maybe 3:00 in the middle of the night, and you got concerned about your pet. Typically, you have to go to an outbound surgery or paying off a lot of money. With that sort of facility, we could offer to our consumers as part of being our membership of our club. So we're thinking about it more as a broader service to our members rather necessarily a straight revenue opportunity. And I think that's something which would be very well received by our consumers as a helpful benefit. So that's how we're thinking about it.
Okay, great. And can I just come back on the click and collect, please, because, I mean, I can order on the website for in-store collection already, no. So what do you mean when you say, it's a new service you've stepped in?
So you're absolutely right. So today, if you order on the website and choose a store location, the first benefit you get is you can collect it for free. There's no distribution charge. Actually, that comes from our centralized facility, and it's shipped on our own fleet to stores for customer collection. And it typically means that you've got a 1-2 day pickup. Click and collect will allow you to do exactly the same, but pick up from store within an hour. So it gives you more immediacy in terms of collection facility. And we don't currently have that facility for customers. So it will be a really lovely addition. The stock is close to you, we can tell you it's there. It's reserved for, you pay for it and go and collect it. Combined with something else we've done, we referred to it very briefly in our statement. But one of the new facilities we've offered to customers is currently in a small number of stores, but we anticipate to roll is when you come to collect a parcel, you can now pull into a dedicated parking outside our store, scan a QR code, and then we deliver that parcel directly to the boot of your car. And obviously, we developed this in light of COVID. Actually, we've seen a really strong take-up from consumers because obviously, it's incredibly convenient, too. So we're going to broaden out all of the ways that you can order and all the ways you can collect to make it as convenient and easy as possible. Actually, the order management system is a really important piece of architecture to allow us to do that.
We will now take a question from Tony Shiret of [indiscernible].
The questions really sort of come up from just listening to what you've just said about online. I don't know I haven't asked this before, but in terms of the profitability of online, where -- relative to the achieved retail EBIT margin of sort of late single digits, where -- what is the profitability of an online order delivered? And sounds relatively expensive doing an online click and collect at the moment? I mean, is there going to be a step change in the profitability of online because of these changes you're making? That's the question.
It's a great question. It actually catered something slightly more fundamental, which is looking at our share of wallet of our customers is still relatively low, i.e., there's a lot of headroom to go for. So I think the first thing is when a store-based shopper starts to engage with us online, what doesn't happen is we don't see a shift of that behavior from store to online. What we see is the total spend with those increases typically doubles. So straight away, the amount of revenue that we get goes up. When we look at an online order, a pure online order versus a store-based order, there's a few interesting dynamics. The margin for audit is lower because, obviously, it's going direct to customer's house. You've obviously got the incremental cost of a courier. But the order value tends to be twice the value of a retail order. So from a cash point of view, cash profit is different between the 2. The most efficient ways and the most profitable routes to serve a customer tend to be 1 of 2 ways, either the customer goes and shops themselves in the store. That's where we make the strongest EBIT margins, or secondly, where a customer chooses the store as a collection point, it gives us maximum efficiency. At least profitable way to serve a customer is when you deliver direct to their home through a courier. And that's why we have order threshold on our orders to manage the profitability.The key thing for us is we're able to balance all of those off. And one of the benefits we see as we move forward is giving customers a lot of different choices to how to serve, firstly, works the customer. Is there everything from an hour on do yourself through to an hour collection point to 1- or 2-day delivery points? So we try and influence customers to make sure overall, we're able to manage the mix of our business. If the entire business switched purely to online only, direct to consumers, like some pure-play models, that actually is the least profitable way you could ever serve a customer. And that's why for us having an omnichannel and managing that mix and providing those facilities allows us to balance all of those off whilst winning the most amount of their revenue. So it's an act, it's a juggling act, but we've been able to manage that very carefully. And therefore, efficiency is important and choices are important.
So to answer the question though, what is the margin on online now versus the achieved retail margin? And what's that going to go to under these new systems?
Yes. We never disclose that, Tony. I know why you're asking the question. It's a mathematical answer, isn't it? Because we don't -- it's blended that matters. And I think just to build on Peter's point, we believe a combination of a nationwide 450-plus store base, together with the ability to deliver out of a single facility, is the best combination to access value in the market. So a true omnichannel retailer compared to a store-only or a pure player-only, and that's where we're investing behind that strategy. It's a false number to quote a channel margin percent for a store compared to a channel margin percent for online because a customer can order at home and they can pick up in store. They can go into a store and order online and come back the next day and pick it up. There's any combination of ways of taking an order from a customer for pulling that order and delivering it to the customer. So to pick out 1 particular channel, which is delivered to home, I think it would just be quite misleading, actually.
I think in light. If you look at what's happened to our business over the last 2 years, you've seen this significant shift as more customers shop in an omnichannel way, but we've been able to grow the profitability of our company. And that's the important thing for us is looking at the overall revenue coming in from the customer and the overall profitability per customer, and that's where our focus is.
Before we take the question from Matt Garland of Citi, [Operator Instructions]
The first one was just, I suppose you've spoken quite a lot around the retail side of the business. But in terms I suppose you're thinking on the vet and First Opinion practice rise in terms of number of stores over the next few years or I suppose your longer-term thinking around that part of the business, I wonder if you could give some more details around that. And secondly, obviously, you talked a lot about the importance of the stores in terms of the total omnichannel experience. But given the kind of rise online and your comments around there's a lot of leases and things coming up for renewal. Do you see the 450 stores as the store estate that you want? Or can you give us a longer-term idea of where you think it would trend to give you the ability to serve customers but also reduce costs? And then finally, in terms of kind of the subscriptions. So I know that it's kind of the bet subscriptions. As an example, you take a proportion of those sales because it's obviously a joint venture practice structure in most of the vet practice businesses. Can you give us a split of the total number of customers? And maybe what the kind of trends you are seeing in terms of people moving across subscriptions or what your thoughts are longer-term in terms of development or subscriptions?
Okay. Well, let me talk first to the vet in terms of First Opinion growth. When we reset the vet business some time back now, we said the most important we wanted was recalibrate, and that's what we've been focusing on doing because we wanted to make sure our core business is performing the way that we wanted to. And we've been really pleased with the progress that we've made, and that continues to be our primary focus. That doesn't preclude us, however, from opening practices. And you will see a small number of practices open. We still have -- we still believe a decent runway of growth, still over 100 stores that have no vet practicing, and we see them as an opportunity, and that doesn't preclude us from opening some standalones. But we won't go there just yet because our focus is still on making sure our core business works well. And I think as we move through this year and obviously, COVID makes that a bit more challenging. But actually, we do have some new vets on the pipeline. And one of the bizarre things that we're seeing through COVID, actually, we've seen quite a lot of interest on pets, come to talk to us about JV. So we'll -- there are always long lead times, but we're encouraged by that. But let me be really clear, we'll always make sure our core business works really well before we open that pipeline again.
And just to add to that points that Peter mentioned on the vets portfolio. Thing to remember, Matt, is it's still a very young portfolio. We still have -- 30% of our practices are still less than 4 years old. So driving that maturity benefit out of our own [indiscernible] practices will still create a significant amount of both cash and profit growth for us to come, but before we open any new practices. So we still got a significant value creation opportunity by driving the maturity of our existing portfolio.
When we talk about -- I mean, it's a really good place to go to us and when you think about online growth, what's the -- do you still going to need your stores? Of course, for many years, our stores have served a very different purpose. As we've built our services business in terms of practicing groomers and subscriptions, our stores do many things. For us, we think our store estate is about right. We will certainly be taking the opportunity through lease negotiations to drive the strongest possible terms we can with our landlords, and we have excellent relationship with landlords, and we've found a few very supportive through these conversations. So we think our estate is about right. I think the challenge increasingly comes about how you continue to repurpose your stores to serve your customers as best as you can. So obviously, service is an obvious place to go. Increasingly, your stores are very convenient collection point to your customers. And we think that will just continue.And I would point out that even despite COVID, actually, our bricks-and-mortar stores actually continue to grow in -- over this 20-week period. So actually, people are still visiting stores, and it just goes to demonstrate you need to have all of those things in your armor, and that's why we go to total pet care.When we think about subscriptions, we've never really split out the balance subscriptions, but it's actually made up of 3 parts. It's made up of health care plans in our vet business, it's made up of flee and worm subscription plans in our retail business, and it's also made up increasingly what we call ease of repeat orders. So these are no contract people that are setting up or repeating delivery. And for us, these are really important areas for us to continue to grow, and build more bundles to customers. Because I think one thing we have seen is customers increasingly just want convenience, they want an easy life. And when you provide -- the #1 reason why people sign up to the fleet program, by the way, isn't price, although it's very well priced. You certainly don't forget it's something you need to do. It's not exactly the most exciting purchase in the world. Worming your dog is not that exciting but you need to do it, and you need to every 4 weeks. So the fact it just arrives on the doormat is why people sign up. And we think there's still a lot of opportunities to find those convenient points, remove degree friction, make your life a bit easier and build. So we're really focused in doing so. And actually, our data team are crucially important in that area because we see the type of customers who are likely to subscribe, and that gives us more look alike customers to go for. So that's a great use of data example of how we're going to use our data to better serve customers. So we are going to be investing heavily in subscriptions. You're going to see more new plans arrive in the coming months. And we think customers are really predisposed to it because that has spread a cost and make lives that easy.
That's all today's questions. I will now hand the call back to Peter for closing comments.
Thank you. Thank you, everybody, of those questions. They were really high-quality questions, and we really always have -- take the opportunity and enjoy the opportunity to talk about business. I'd just like to thank you for your time and your continued support. And most importantly, for us all, please stay safe. Thank you.