Good morning. I hope you're all safe and well, and welcome to Pets at Home's FY 2022 preliminary results presentation. I'm Peter Pritchard, the Group CEO, and with me today is Mike Iddon, our Group CFO. Despite another period characterized by significant and evolving external challenges, our performance this year has been nothing short of outstanding, delivering record growth in sales, profit, and cash flow. We continue to take share across each segment of the market in which we operate. We welcomed over 1.1 million new pet owners across our business, lengthening the runway of growth ahead of us, and we improved spend per customer with our aggregate share of customer wallet, increasing by 600 basis points to 37%. Simply put, our business has never been in a strong position than it is today.
The ongoing resilience of the pet care market, coupled with our unique omni-channel model and clear strategic priorities to make pet care as affordable, easy and convenient as possible for customers, means that we look into the future with the utmost of confidence. We continue to invest in our business to build capability and to drive future growth, outpacing their own market in which we operate and creating long-term value for all our stakeholders. It has been a year of breaking records. Our new customer acquisition, our Puppy & Kitten Clubs increased sign-ups by 48% year-on-year, with club members now accounting for approximately 1/5 of our record, 7.3 million VIP customers.
Over 90% of Puppy & Kitten customers acquired over the past two years remain active today, providing a significant growth opportunity over the next 12-15 years as they engage and shop across our full ecosystem of products and services. We already have 2 million VIPs shopping more than one channel. That's up 40% in two years. We're also successfully retaining these customers, having reduced churn by 400 basis points and maintaining over 95% of active customer spend beyond year one. The output, well, that's a record year of sales, profit, and cash delivery, and growth in our market share to 24% and a record dividend for our shareholders. We have a track record of taking share and demonstrating the advantages of our omni-channel pet care ecosystem are very clear.
With over 60% of our growth over the last five years coming from market share gains. We have a bold, clear plan to achieve at least GBP 2.3 billion of customer revenue in the medium term, supported by the strategic investments that we're making. We continue to digitize the business with Project Polestar helping unlock significant opportunities around data, subscriptions, and loyalty. Customers can now access all our products and services through a frictionless single login, and a new iteration of our mobile app for a much improved shopping experience is scheduled for launch later this year. Our ongoing store transformation program is improving our customer proposition and driving growth in VIP registrations, subscription sign-ups, and service performance improvements. Project Pathfinder is improving practice economics.
Our client productivity is improved and so has our client engagement, and the health of veterinary estate continues to go from strength to strength, with growth in average practice revenues surpassing GBP 1 million for the first time. That's accompanied by expanding margins and many additional levers for future growth. Development of our new storage and distribution facility in Stafford remains on track, and it's on budget, and it will become fully operational by summer 2023. That will deliver capacity and efficiency benefits, and it will future-proof our operations for many, many years to come. We are well-positioned to accelerate our growth in market share in the year ahead. We have more active customers than ever before.
With a prevailing affluent demographic and propensity to prioritize pet care over other categories of spend, anecdotal evidence tells us that over 90% of these customers are not intending to reduce their level of pet care spend in the foreseeable future. We also know these customers better than anyone else, with almost 10 years of proprietary data across our VIP club helping us provide personalized and convenient solutions throughout the full lifetime of the pet. Our broad range of economically resilient products and services, while over 75% of them are non-discretionary in their nature and offers choice, quality and value to all customers.
Through offering full price architecture within food and a very strong private label proposition that can represent up to a third of savings of customers versus their brand equivalent, we're helping owners feed their best diet for their pet through the lifetime of the pet. Our pet care plans offer further value and convenience for customers, providing essential pet care for a low fixed monthly cost while creating an annuity revenue stream for the group. Above all, we have an unwavering commitment to keep pet care affordable for owners, and we'll never let price be a reason for customers not to shop with us. As a business, we are well positioned to navigate the near term, industry-wide inflation pressures, and we continue to work closely with our broad base of suppliers to unlock efficiencies across our supply chain and mitigate volatility in freight rates.
We've got a comprehensive program of live initiatives across consumables, packaging, store operations, and energy usage to reduce our overall cost to serve. With declining lease lengths and average rent reductions of up to 25% on negotiation, we're leveraging our nationwide store network as a flexible and cost-effective distribution network. Our financial strength and resilience enables us to invest in strategically important initiatives that support sustainable long-term growth towards GBP 2.3 billion of customer revenue and beyond, having made better than expected progress this year. I'm now gonna hand you over to Mike, who will run you through the financial headlines.
Thanks, Peter. We are today reporting record financial results and a strong progress across all of our key strategic measures. These very positive results prove the strength of our business model, the relevance of our strategy, and the resilience of the pet care market. Today, our business has never been stronger.
Just before I run through our headline numbers, it's worth pulling out four standout highlights from our results. We delivered GBP 144.7 million of profit. That's before the change in the IAS 38 accounting policy. This represents year-on-year growth of over 65% and exceeds market expectations. We've gained 1.1 million new customers, a growth of 18%, helping drive our market share from 23% to 24%, and these customers will be a source of sustained growth going forward. Group revenues grew by over 15% to GBP 1.32 billion, and that was driven across all product categories and services, including a Vet Group like-for-like revenue growth of over 17%.
We generated cash flow of GBP 95 million, up close to 41% year-on-year, including a step change in the cash results of the Vet Group to over GBP 50 million, helping us exit the year with our strongest ever balance sheet and increase our total dividend by 48%. Turning now to the full year numbers and looking first at our strong revenue performance. Total group like-for-like revenue growth was close to 16% on a one-year basis and just under 26% on a two-year basis. This reflects the sustained strong growth across all channels with 22% more customers shopping across more than one channel, helping increase average customer value. In our retail business, like-for-like revenues grew 15.8%. With this growth coming from both stores with growth of 15% and omni-channel with growth of close to 16%.
We are increasingly using our stores to fulfill online orders with around 20% of orders now picked in store. This gives us a competitive advantage with more delivery options for our customers, as well as a better economics driving higher contribution per order. Category-wise, food revenue grew by over 21% and accessories revenue, including consumables such as litter and bedding, grew by nearly 14% as more pets came to the market into our stores, and we saw our Puppy & Kitten Club grow by 23,000 new pets a week, giving us a significant lifetime value opportunity as we retain and deepen the relationships with these new customers. In our Vet Group, full year like-for-like revenue growth was over 17%, driven by a significant step-up in practice revenue, with a number of practices generating more than GBP 1 million in revenues doubling during the year.
Overall, across the whole group, both retail and vet, our customer revenues grew by more than 16% to over GBP 1.67 billion as we continue to make great progress towards our medium-term customer revenue target of GBP 2.3 billion. Turning now to our full year profit result, like many other companies, we have updated our accounting policy in relation to IAS 38 intangible assets. As a result, a number of software and related implementation costs which were previously capitalized are now required to be expensed and the associated amortization charge reversed. This applies looking backwards in the current year and looking forwards. This change in policy coincides with our peak investment as we build capabilities to drive future growth, including Project Polestar, supply chain capacity investments, and as we enhance our in-house data capabilities.
Group underlying pre-tax profit of GBP 144.7 million is stated on a previous IAS 38 accounting basis and was driven by strong revenue, an expansion in gross margin, and robust underlying cost control. The net impact of the revised accounting policy on our FY 2022 PBIT is GBP 14.6 million. After taking this into account, under the new policy, our underlying profit is GBP 130.1 million. It's important to understand there is no impact on the group cash position or free cash flow, and overall, there's no net profit impact over the full asset life. More importantly, the accounting change has no impact on our planned investment schedule, future cash generation, or our ambitious growth plans. We continue to be strongly cash generative. Group underlying free cash flow was GBP 95 million.
That includes a year-on-year benefit in working capital of GBP 26.4 million, with better efficiency in retail and a GBP 6.5 million reduction in operating loans to our joint venture practices, as both profitability and cash generation stepped up across our veterinary estate. Capital investment was GBP 73.1 million, reflecting investment in strategically important areas, including our distribution network, our store transformation program, and data analytics and systems. The impact of the IAS 38 policy change reduces our reported capital investment to GBP 49.1 million, although the cash investment stays the same. We've also successfully refinanced our revolving credit facility on market leading terms and increased the facility to GBP 300 million. This, taken together with our strong ongoing cash generation, gives us significant capacity to invest organically and inorganically to drive future profitable growth.
Taking everything together, we ended the year with a net cash position of GBP 66 million, and that includes nearly GBP 20 million of final proceeds from the disposal of our specialist hospitals, which we received ahead of schedule during the year. All of this means that our balance sheet is the strongest it's ever been, with net debt on a post IFRS 16 basis reduced by over GBP 90 million- GBP 317 million, giving us leverage of 1.3x. That's down from 1.9x in the prior year. The strong cash generation in the year has enabled us to pay a 48% increase in the full year dividend to shareholders. In summary, Pets at Home continues to go from strength to strength, and the prospects for the business are the strongest they have ever been.
We've had a record year of sales, profit, and cash, and made significant progress across all of our strategic measures. The resilience of the pet care sector, taken together with the strong tailwind of over a million more customers and our robust self-help plans will help us navigate the near-term economic challenges. The investments we are making in the business will help us both build and entrench our competitive advantages and continue to grow our market share. I'll now hand back to Peter.
Thanks, Mike. I'm incredibly proud of what we've achieved in the past year, and that we continue to run a responsible business as well as a successful one. We could not have achieved this success without the support and dedication of all of our colleagues and partners across the group who have helped make Pets at Home a bigger, stronger, and more efficient business. We have a truly unique business, and by leveraging our strengths and continuing to put the customer first, we will continue to grow our share of this resilient market in which we operate. As I hand over the leadership of this great business to Lyssa McGowan, I have the utmost confidence that Pets at Home will continue to deliver sustainable, profitable growth as we build the best pet care business in the world. Thanks for watching. Stay safe and take care.
Good morning, everyone, and thank you for joining our call. I hope you're keeping safe and well. I'm Peter Pritchard, the Group CEO, and with me today is Mike Iddon, our Group CFO. We're really pleased to share with you our preliminary results for our financial year 2022. In a period characterized by significant and evolving external challenges, our performance this year has been incredibly strong, and today, our business has never been stronger. This is clear in the results that we're reporting today, demonstrating the ongoing success of our pet care strategy, the advantages of our unique omni-channel model, and the ongoing resilience of the pet care market. Our strong financial position means that today we're also pleased to announce a 12-month share buyback program of up to GBP 50 million as we continue to create value for our shareholders.
There are three messages to take away from today's presentation. First, we have delivered a record set of growth across the business. We have more customers than ever before, having welcomed over 1.1 million new pet owners to the group. Our Puppy & Kitten signups increased by 48% year-over-year, with club members now representing approximately 1/5 of our record 7.3 million VIP customers. We've broken records across all of our key financial measures, delivering our strongest ever sales, profit, and cash flow. Group two-year like-for-like was 25.9%. Group EBIT grew over 65% to GBP 144.7 million, and free cash flow was up over 40% to GBP 95 million, supporting payment of a record GBP 0.118 per share dividend to our shareholders. All parts of the group are in growth.
Our retail two-year like-for-like grew by 26% with a broad-based growth across all channels, both stores and online. Our Vet Group two-year like-for-like grew by 24.5%, underpinned by the strength of our practice estate, for the first time our average practice revenue surpassing the GBP 1 million mark, again for the very first time. We continue to outpace the market in which we operate, and we're taking share across all segments, and we're growing our market share to 24%. We also continue to make excellent progress on our social and value strategy aligned to our three pillars of planet, pets, and people. Secondly, our long-term prospects have never been stronger.
We have a clear and ambitious plan to achieve at least GBP 2.3 billion of customer revenues in the medium term, and are supported by the strategic investments that we are making. We continue to digitize our business with the first element of Project Polestar now live, and that's helping unlock significant opportunities around data, subscription, and loyalty. Our ongoing store transformation program is improving the customer experience and driving elevated levels of VIP registrations, subscription signups, and sales performance. Investing in our Click & Collect capability, we're successfully leveraging our nationwide store portfolio as a flexible and a cost-effective distribution network with two-hour home delivery now live in 120 locations. Project Pathfinder is improving practice economics and improving clinical productivity and client engagement, and that's driven a 15% uplift in healthcare plan penetration versus the wider estate.
Of course, it's supporting our ongoing growth of every business. We continue with the development of our new storage and distribution facility in Stafford. It remains on track and on budget, and it will come online by summer 2023, delivering capacity and efficiency benefits, and of course, future-proofing our operations for many years to come. Third, we are primed to accelerate growth in market share for the year ahead. We've got a record number of active loyal customers, favorable demographics, and of course, we have 10 years' worth of proprietary data across our VIP club. We are uniquely positioned to provide personalized and convenient solutions throughout the full lifetime of a pet. Our broad range of economically resilient products and services, over 75% of which are non-discretionary nature, offers choice, quality, and value to customers.
Of course, because we offer such a full price architecture within food and a very strong private label proposition, we can represent significant savings to our customers, too. We're helping owners feed their pet the best possible diet for their budget. Our Pet Care plans offer further value in convenience for customers, providing essential pet care for a low fixed monthly cost while creating an annuity revenue stream for the group. Above all, we have an unwavering commitment to keep pet care affordable for customers and will never let price be a reason for customers not to shop with us. As a business, we are well-positioned to navigate near-term industry-wide inflationary pressures and have clear plans in place to drive efficiencies across the business to help offset those cost headwinds.
In conclusion, our performance over the past year further demonstrates the strength of our unique pet care strategy, the benefit to the investments that we've been making, and the robustness of the U.K. pet care market. We stand here today a far stronger pet care business, and we look to the future with a lot of excitement and confidence. Continuing to put the customer first by making pet care as convenient, affordable, and rewarding as possible and doing the right thing by all our stakeholders. We ensure we continue to run a responsible business as well as a successful one. Finally, and most importantly, I'd really like to express my sincere thanks to all my amazing colleagues and partners across the group. I remain incredibly grateful for their ongoing hard work and commitment as we continue to build the best pet care business in the world.
I'll stop there now because I'm sure you'll have questions which my team will only be too delighted to answer. I'll hand the call back to Tracy.
Thank you, sir. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. We will now take our first question from Eleonora Dani from Shore Capital. Please go ahead.
Two questions from me, please. First of all, I appreciate it might be a bit difficult to call it out, but what kind of a pet population growth are you assuming going forward? Secondly, I was wondering if you could provide a bit more color around customers not trading down to cheaper products, and if they decide to do so, how do they receive guidance on which own label product is best for their pet?
Thank you for those questions, Eleonora. They're really helpful. Look, I think on the pet population, it's always been a very difficult thing to try and measure and correlate. We typically do that exercise once a year. What we do is we look at the sort of some leading measures for us, and they tend to be sign-ups to our Puppy & Kitten Club and new client registrations. You remember through COVID, we actually saw elevated levels. We're typically seeing Puppy & Kitten registrations sort of in the order of about 20,000 a week. Now, we have to remind ourselves, of course, that there is a natural churn that takes place in pets because they only live between 12 and 15 years. We believe they're still at elevated levels versus what we saw pre-COVID.
If we look at customers, at this point in time, it's really hard to see yet any concrete evidence of customers doing anything radically different. We recognize that we've got 7.3 million customers. We tend to have a slightly more affluent shopper base, and we certainly have a much more engaged shopper base. In the main, we expect most pet owners will continue to do what they normally do because 75% of their spend is very, very habitual. We know that customers, once they start feeding a diet, for example, they continue to do that without change. It's only normally when something happens to the pet that they engage in conversation. We do recognize that cost of living pressures may well be a factor for customers who come and talk to us.
This is where we think we have a distinct advantage. Because we invest so heavily in our colleagues, and we have trained colleagues in every single one of our stores, particularly around nutrition, we're able to help guide customers to try and meet their needs. In the case where they do speak to us about that challenge, and I have to say currently they're not, but that could well be the case that they might do. We think own label here is a real opportunity. Because typically on a bag of dog food, you can save in total cash, typically between GBP 5 and GBP 7 per bag by buying private label. Now, while that might represent a potential downtrade in terms of that transaction, what we can see is customers who buy private labels, two things happen.
They spend more money with us overall. We know our private label food shoppers are among our most loyal and biggest spenders because they obviously then get locked into food in your store. The second thing, of course, for us is we make more margin. While, you know, I think this may well be a challenge for customers, we actually recognize that we think private label's got a really important role to play as we move forward. I think as we look across the rest of our organization, within vets, we're not yet seeing any changes to customer behavior, and I don't think that's surprising because a lot of what we do is responding to, you know, a pet issue. Obviously it's often much more about being responsive. In our grooming business, this year we'll probably groom over a million dogs.
The boom we saw in new pet ownership means actually our grooming salons have actually been running near capacity. Actually, I think what that means is the current waiting list for our grooming salons is typically four to five weeks. I think we've probably got a lot still of pent-up demand, and we're flat on capacity, so I don't think we're gonna see any material changes there in the short term. Does that answer your questions?
It's pretty helpful. Thank you.
We will now take our next question from Andrew Porteous from HSBC. Please go ahead.
Yeah. Thank you. Hi, team. I guess, Peter, this is the last time we will hear from you as CEO of Pets at Home, so just a quick word to say sort of congrats on your tenure as CEO. I think you leave the business in a very different and a much better shape than you inherited it in. And best of luck with whatever comes next. A couple of questions from my end. Some interesting questions asked already. Just, I mean, the share of wallet increase is impressive. I mean, 600 basis points increase in share of wallet. Can you perhaps just talk through where you're seeing that come through and what spend is it that you're winning back from customers? And then perhaps one for Mike as well.
I mean, obviously, we've got the increased dividend, we've got the buyback coming through this year. We've also got higher CapEx. Can you just talk perhaps about how you see the shape of cash flow in the year ahead? Do you think you'll finish the year still in a net cash position?
Okay. That's great. Thank you, Andrew. Thank you. There are two great questions, and thank you for your kind words. I appreciate that. Look, I think on share of wallet, you know, our whole strategy has been based around how we build out our share of wallet. I think that people have been asking us to really evidence where data has made a difference. Actually, this is exactly where data has made a difference because our ability to be able to personalize our messages to customers based on their next best action. What we've been able to do through really effective CRM, we've been able to help drive both frequency and spend amongst those customers.
Also at the same time, you'll see in our results, we've also been able to reduce churn, which actually has been a really effective program for us this year. Of course, a lot of the mechanisms we've been putting in place really do drive a repetitive nature to shopping. The work we've done on subscriptions, and we've hit a benchmark of 1.5 million subscriptions. I remember when I did our first one, we're talking a couple of 100,000. We've made enormous progress in a short period of time. They, of course, lock spending.
I think it's been a combination of all the things we've been talking about actually really just coming home to us and evidencing, I think why, in part, bringing everything together and making it easy really works for customers because you remove friction and barriers. I think it really sets us up well as we move forward. Actually, for us, the agenda is a continuation of just doing more of the same. As we've learned so much in these last 18 months as we build out our capability, we're really starting to understand the pools where we can really drain share of wallet. Actually, that's really where we'll be going to next as we continue to activate our CRM even more effectively. I'm really pleased to see those results. I have to say there's so much more still for us to come.
I keep on reminding myself, in order to get to that GBP 2.3 billion, I don't have to win any more new customers at all. It's just to grow my share of wallet with existing customers. I think for us, that's why we feel so confident about the future. Even with the short-term turbulence, we've got a really clear plan, and we know how to enact upon it. With further time, I'm going to hand over to Mike to talk about cash.
Yeah. Thanks for those questions, Andrew. I'll deal with the buyback and then I'll talk about the cash flow for the year ahead. Yes, today, as well as the 48% increase in the ordinary dividend, so total for the year, just short of GBP 49 million, we're announcing a GBP 50 million buyback over the next 12 months. The facts supporting that buyback are really strong. You know, we've got a balance sheet that, as Peter said in his introduction, is as strong as it's ever been. We've no debt, and we've got GBP 66 million of cash on the balance sheet. The business is very cash generative. The year just gone, free cash flow was GBP 95 million. That was a step up of just under 41%.
In particular, you know, you point to the Vet Group as a step change in the cash performance of the Vet Group over the last 12 months. The Vet Group alone contributed GBP 50 million to that free cash flow. Our capital allocation policy, of course, has always been consistent and clear and provides for us to return buyback of shares. That's what we're announcing today, in addition to the big step-up in the ordinary dividend. We are looking ahead in the year ahead. You know, we've got very clear about the prospects for the business. The business will remain very strongly cash generative. We've fully funded our investment plan around Polestar, opening the DC. Both those projects remain on plan, on track, on budget.
To answer your specific question about where we close the year, yes, even with the GBP 50 million buyback we announced today, we'll finish the year net cash positive. I hope that's dealt with those two questions, Andrew.
Yeah, very helpful detail. Thanks very much, guys.
We will now take our next question from Charlotte Barrie from Berenberg. Please go ahead.
Hi, guys. Thanks for taking my questions. I have two, please. You've already mentioned the customer churn. I was just wondering if you could be a bit more specific about how you're defining this and also, if possible, the base that that 400 basis points reduction is coming off. Secondly, a bit of a longer one on the vet.
It's obviously really promising that average vet practice revenue has surpassed GBP 1 million. How much of this is a reflection of practices that were already considered mature continuing to grow and reaching a much higher steady state level, as opposed to just a function of the average age maturing, and those younger practices maturing faster? I guess the difference being that if it's the former, then our assumptions for the value of your existing estate at maturity will start to look quite conservative.
Okay. Two great questions. Let me talk about customer churn. I'll actually take it back to over a year ago when we talked about some of the work we're doing to anticipate when a customer was going to leave us, and that was based upon doing some pretty deep analysis on looking at customer patterns that indicated that a customer was likely to leave. Now, there's often a very good reason why a customer may leave us, and that's often the death of their pet. Obviously we're able to see that. You can take those customers out of that equation 'cause there's nothing we can do to change that.
We did a lot of test work last year, understanding the patterns, predicting those patterns, and then we trialed a whole series of mechanics to see what would drive a difference in behavior. We did that across a whole series of subgroups. In any work we ever do, we always have a control group that gives you the sense of what happens if you did nothing. Those trials were incredibly successful for us. As we started last year, as we moved our way through at the end of quarter one, we defined enough to help us both predict and understand what the right mechanics were to reengage customers, and many are now always on. In effect, in answer to your question, the 7.3 million base actually is the entire audience that we look at.
We do this incredibly dynamically. Using artificial intelligence and using the capability we've built, that is now always on and running in the background. Each period we have a specific churn activity, which identifies customers who we think are likely to leave us, and then we target them with a specific activity. As I said, against all those groups, we then have the control group that actually gives us a sense of is it successful or not. One of the beauties about what we've developed is, as we're working our way through, those algorithms learn, and we become more and more sophisticated as we've worked our way through. As we stand here now, I think our churn campaign is probably the most sophisticated we've ever been, but it continues to learn.
It's a real opportunity because of course, in any business you're always acquiring and you're always losing. If you can win more and lose less, it's a fantastic place to be. That's what we seem to have achieved within the last year. Mike, shall I hand over to you to talk about practice maturity?
Yeah, let me pick that point up. I think your question was around growth rates in our vet estate. Overall, of course, in last year we achieved 17% like-for-like growth in our vet business, and we're welcoming 9,000 new clients a week. We closed the year with 1.7 million active clients. Our vet estate, of course, is still relatively young. We've still got more than half our practices are less than eight years old, and we're still gonna see a maturity kicker coming in from those practices. However, even practices that are 10 years old are still growing 7% and 8%. You know, our practices more than 10 years old, their average sales are over GBP 1.4 million.
In fact, we've got some practices with revenues of GBP 3 million-GBP 4 million at practice level. We've got a number of drivers of growth going forward. Clearly, we'll continue to see the kicker from maturity coming through as those practices become more established. In addition to that, we've got a number of initiatives that will grow our practice revenues. One of those is an initiative called Pathfinder. It's out in our stores in our practices today. That releases vets' time and improves productivity for our vets, and we know that is generating higher revenues in the practices that so far have received it. Second thing is we have a plan to extend a number of our practices in our stores.
A lot of our practices still have the same footprint that they had when they were set up, and we've got the capacity in our store network to extend practices. We've got 30 in the pipeline coming forward. Third thing I'd point to is that, as our practices get established, we'll be putting in more advanced procedures for pets in those practices, and carrying out procedures that otherwise would be done in referral centers. That's another avenue of growth. The fourth thing I'd point to is that we're opening more practices. Quarter four saw us open the most practices we've done for a while with four practices. We're signaling between five and 15 a year going forward. Our pipeline of joint venture partners is looking very positive.
I think demonstrably our vet model has proven itself really well across the last two years and has great appeal for vets. We're very encouraged by that. As I say, we've got multiple levers of growth going forward over and above the kicker we're gonna continue to see through practice maturity.
Thanks very much.
Thank you.
We will now take the next question from Jonathan Pritchard from Peel Hunt. Please go ahead.
Morning, all. Good luck, Peter, in the next chapter. Great career at Pets, and good luck in the future.
Two for me, just more on the bricks and mortar side actually. The refit program, how is that evolving? I think it's probably three, even four years ago since the sort of Stockports and the Hemel Hempsteads and the Milton Keynes. Where are we now in terms of the changing mix in space and new innovations on refits? What's the sort of new news there? Then secondly, just on conversion, you know, is the latest cohort of customers any different in terms of their frequency of spend? Or is there anything in conversion in general? 'Cause obviously general retail traffic is pretty weak. But are people just not really changing their pet shopping habits?
Yeah. Thank you, Jonathan, and thanks for those kind words as well. Appreciate it. I'll take the question on conversion and I'll hand over to Mike to talk about our estate. Look, as we sit here today, we're not seeing any dramatic changes in customer behavior. I think what's interesting, if we look at our new customer base, one thing which definitely changed in the last two years, our new customers typically are younger. I think that really is reflecting people who have recognized they've got much more flexibility in their lives based upon flexible working and therefore require a pet. What's really interesting about that cohort, they are among our most valuable. They're much more likely to be a vet client.
Actually, you can see they're the single biggest drivers of new client registrations and are valuable. They're significantly more likely to have a subscription, and they are definitely more interested in nutrition. They've actually not only have we gained a lot of them, they're very, very engaged customers. As we look at our core customer base, and this is why I always have to say, look, this is where pet is a little bit different to sort of general retail. 'Cause I think the first thing is we recognize that the pet is a member of the family and, you know, we recognize often the pet is placed up there alongside children in terms of the priority in the household.
The spend on pets is still relatively small in the context of the overall family spend and is very, very habitual. Anybody who's a pet owner on this call will recognize you feed your pet pretty much the same thing day in, day out, same quantity, often same brand. It's very habitual. We don't expect that's gonna change. Although we think for some customers, they may well seek out better value. I would say the rest of our business behaves like that. You know, our cat litter, our hay or straw, and a lot of our services again, are demand driven. I think we will see moving sands, but I don't think we're expecting to see seismic shifts.
Because we know our customer base tends to be slightly more affluent and is definitely significantly more engaged in their pet, and that really defines us versus our broader base competition, we think that we, you know, there are real points of confidence in us in terms of how customers behave. I was here in sort of 2010 when we saw sort of the last major financial crisis, which, you know, was a different size, different shape, and a makeup in terms of customers were under pressure. We saw two things happen. We saw overall spend on pet go up.
Interestingly enough, it was our fastest acceleration into advanced nutrition, which I think is also quite interesting in terms of often that can give you better value overall in terms of the quality of the food that you're feeding, you feed less food. We're anticipating a consistency of measures we move through, although we'll be working around the edges to make sure we identify those customers where value will be more important. 'Cause we know them and we can speak to them individually, we can be much more targeted in our ability to influence them. Mike, do you wanna talk about our Pet Care Centre program?
Of course, yeah. Thanks for that question, Jonathan. I think I'll headline it just by giving the overall like-for-like for our stores actually. Year just gone, store like-for-like was 15%. On a two-year basis, store like-for-like was 18.6%. I mean, overall, our 450-odd stores are in very, very healthy growth. In terms of the transformation program, and you'll have seen some of those. I know. Your reference to Hemel and Milton Keynes. So far, including new openings, there's 52 stores now that are in that Pet Care format that you referenced. It is not a cookie-cutter approach. You know, what we do in each one very much tailored to the store.
You know, we'll look carefully at extending the vet, for example, to give them more space. Back to that earlier answer I gave to the vet question. We'll put more services in the stores where possible. Grooming salons, we put 17 new grooming salons in our stores in the year ahead. We'll introduce the deliver from store stock initiative, roll that out as we go. Create more space in those stores for colleagues and customers to interact, to give advice, to sell subscriptions. But by no means is it a cookie-cutter approach. Each one in terms of its capital, the investment is tailored for that particular store in this particular market. In the year ahead, you know, we'll plan sort of GBP 40 million-GBP 50 million.
I mean, that will be our sort of normalized cycle of refurbishment, and we plan pretty much that level going forward, GBP 40 million-GBP 50 million a year. We're delighted with the results. We've got much better customer engagement in those stores. You know, we've been very successful on subscriptions. We're even more successful in those stores. The things we know we're doing there are now showing through in our results, and we're gonna continue to roll that program out in the year ahead.
Great. Thank you very much.
Thanks, Jonathan.
We will now take our next question from Tony Shiret from Panmure Gordon. Please go ahead.
Morning, gents. Thanks for taking question. Just as it seems to be the habit on this call, well done, Peter. It's really long time, and you don't know how rare it is to be able to celebrate any CEO in U.K. retail has actually done a good job. Very rare. Moving off the groveling part onto the questions. Yeah. On the pet cohort sort of debate, I just wonder if the boost that we saw during COVID is, you know, is a sort of one time lump in the cohort, as it were, and you know, subsequently, there is no sort of follow through in terms of the volume of pets.
I mean, presumably, they're all spayed and basically it's down to how many breeding animals there are and how often so I wonder if you got any sense of that. Also, on that sort of line, generally, as the owner of some pretty old and expensive cats, I just wonder at what point, you know, people start spending on veterinary care for their pets, because presumably young ones don't really need much. You know, your vet practices have presumably got a boost coming down the line in terms of animals getting older and getting sicker. Just on one last thing.
I just wondered if you'd give us an update on your marketing costs and where you see those going, 'cause I presume a lot of the stuff you're doing at the moment is sort of, like you say, capitalizing on your existing customer base, and presumably moving forward, there will be a greater emphasis on new customer acquisition and that will cost you something. Those are the questions.
Great. Thank you, Tony. Look, I'm gonna take that as a compliment from you, Tony, 'cause I know you've always been really tough on me, of course. So thank you for saying such nice things. Look, I think the way we think about the pet market is without question, these last couple of years have been very unique and we've seen a boost 'cause we always know there's this sort of, in a nice sense, this churn element of pets die and pets are born, and the pet market has been, in terms of numbers, incredibly flat actually in cats and dogs. That's why this has been such a big structural change.
We think of it more like a baby boom, where the incremental amount of pets we've seen in the last two years, we expect will then move through, like, as you described, like a big lump, but the overall market is bigger. I really read as we sort of maybe get back to more normalized times. We've got more people still registering for Puppy & Kitten Club than we did prior to COVID. That may be in part because it's now much more recognizable to customers. I think as we get closer to the summer, we do our annual sort of read of the pet population.
I think it'd be a fair planning assumption to expect that the fact that boost is gonna normalize and actually the overall pet population actually remains at a higher level, but won't continue to elevate. Does that make sense? Which means you've sort of got 10-15 years worth of spend ahead from those customers. It sort of leads me into that sort of second part you talked about, which is where cash is spent. You're absolutely right. The way this plays out is typically your spend in retail is initially elevated slightly as you buy things that you need first time around for your pet. Then it normalizes into consumables, food, cat litter, bedding, those sort of things. Your vet spend typically is very low.
Typically, you get your annual boosters and you shouldn't really be going to the vet in the early years of your life. Your assumption I think is absolutely right. We have more young customers and young pets in our vet business, which is a really interesting proxy for the future because you're absolutely right. As a pet matures, their spend increases, and typically 60%-70% of the spend on a pet happens in the latter part of its life. Sadly, putting a pet to sleep, which every pet they will ultimately be put to sleep, is one of the more expensive things that you'll often spend your cash on. You're absolutely right in terms of, I think the prospects for our vet business are incredibly strong.
I also think when you're looking and we always talk about maturity in our vets and why it takes 10 years. It's exactly that factor. We recruit lots and lots and lots of new vets and they take time for that spend start to multiply. I'm with you. I think the future revenue opportunities at our vet is probably still one of the most exciting opportunities that we have in our business. Marketing, our marketing costs are actually incredibly low, typically less than 2% of our revenue, which is very low. In part because we benefit by having such strong physical presence that our lowest point of cost acquisition have, and I suspect will always be, through stores.
With the volume of growth we've seen in footfall, that for us, I think is a distinct advantage because we can recognize that cost of marketing and acquisition actually been going up. If you're a pure play, that's pretty bad news. For us, it's really good news because we continue to leverage our store estate. As we're moving forward, we're not assuming, by the way, any significant increase in marketing costs at all because we recognize for new pet ownership, we still know the most successful channel of acquisition is customer gets pet and actually comes to store first.
We can pre-trial that with some digital marketing, and we know where to do that and how to do that, but it gives us a distinct advantage rather than trying to spend GBP 25 cost acquisition per customer to get them to change provider. We think that's a distinct advantage, don't we, Mike?
Absolutely.
Thank you very much.
Thanks, Tony.
We will now take our next question from Manjari Dhar from RBC Capital Markets. Please go ahead.
Hi. Morning, guys. Thank you for...
Hi.
Taking my questions. I just had on pricing, I think we've been seeing that the branded goods in supermarkets have sort of risen quite materially over the last few months. How are you thinking about pricing in the own brand? Are you looking to widen your price differential there? Then secondly, maybe on rentals, have you seen your more recent rent renegotiations continuing at the average 25% reduction rate?
Two great questions, actually. I'll take the first one on pricing. We have seen some inflation from the brands. Actually that pricing we have seen pass through into the market as a whole. That is actually now fully reflected in our base. We've been keeping own brand pricing particularly competitive. I think the thing for us is even if you maintain the percentage difference, by default, you expand the cash difference. As we move forward into this year, because we have much more control over own brand pricing than we do potentially brands, in terms of inbound costing, we actually are effectively seeing this as a significant opportunity.
I think the biggest opportunity of all, though, is our ability to really double down on Subscribe and Save or auto ship, because typically a customer can save up to 10% on the things that they're buying habitually. While we'll keep a really competitive position on pricing, so we will not be out of kilter at all, I think what you'll see from us is an acceleration in really driving Subscribe and Save for customers, because it's a way of getting the food that you want anyway on a timetable that you choose with no contract or commitment, and you can save money, and you'll see us be particularly focused on private label, because we think there is a real opportunity to lock in loyalty. Mike, do you want to talk about where we are on rent?
Yes, of course. Our rent reduction program, which has been underway now for a couple of years, is one of our many self-help initiatives we're taking a very proactive stance on that helps us push back actually on a lot of cost inflation. Talking specifically about the rent reduction program, yes, in our most recent rent reviews, we're still seeing, you know, average rent reductions of between 20% and 25%, so pretty much on the same levels that we've seen in the last couple of years. We're planning to do about 40-50 of those in the year ahead, so about 10% of the estate. Probably the same level we've done in the last couple of years. We look beyond this year, over the next five years, we have about 300 lease events coming up.
That's either a lease coming to an end or a break clause coming up in the lease. All of that gives us quite a lot of operational flexibility on our rent roll, and we're gonna continue to be very focused on getting our rents to be lower. As I say, it's one of our several initiatives we've got in place that helps us push back on cost price inflation we're seeing elsewhere.
Great. Thank you, and all the best for the future, Peter.
Very much. Appreciate that.
As another reminder, to ask a telephone question, please signal by pressing star one. We will now take our next question from Simon Bowler from Numis. Please go ahead.
Morning. Thanks, all. Peter, I saw you this morning, so you're not getting any more niceties out of me at this point in time. Three questions from myself, if it's okay. First one, can you just talk about kind of any supply challenges or lack thereof, I guess particularly on kind of the food side of the business or, if everything's continuing to be quite smooth from that perspective. Secondly, there's a stat you've called out in terms of the 40% share of new puppies and kittens. Just trying to kind of think about and reconcile that with your kind of overall market share of the pet care market. Have you got a sense of kind of what that share of new puppies and kittens would have been in kind of previous years?
Third and final question was just to kind of touch on a piece on the vet side of the business where, as you say, kind of we saw 17% like-for-like across the group. I think there's a stat in your presentation saying that those practices over 10 years old saw 16%, which is kind of quite a narrow gap between those over 10 and those sub-10 versus what we've seen before. I'm just wondering whether that in any way was kind of reflecting capacity challenges of some of your vet practices to scale any faster than that in a market that probably is growing quite fast.
Yeah, sure. Thank you, Simon. Look, three great questions. I'll talk supply and I'll talk vets, and actually I'll hand over to Mike to talk about puppies and kittens. On supply chains, I think we when we did the last review, we talked actually, we had seen some supply challenges, particularly on food at the back end of last year. Availability was challenging, and we think we left a bit of money on the table in terms of availability for customers. As we sit here today, our availability is actually in really fine shape. We're certainly less exposed to international freight challenges because 80% of what we buy comes from the U.K.
Our challenge last year was more about raw ingredients availability and manufacturing capacity in the U.K., and that's sort of now caught back up. We're in really good shape on food. We're in really good shape on accessories. One of our distinct advantages, and it wasn't planned that way, it's just the way it is we actually are quite a slow-moving business where we hold stock, and therefore, we're not one of those two supply chains actually, you know, see the immediate booms and pass it through to customers. We've been able to mitigate a lot of things for customers by just using the stock in the system to be able to navigate our way around.
It's not something I'm worried about, but I actually think there's a bit of upside this year as our availability this year is definitely better than it was at the back end of last year. I think that point on Vet is a great one actually, because you're right. I think it's, you know, if you look at the total growth out of our Vet Group and look at the performance out of our 10 year+ practices, we use this word maturity, and actually it's just the wrong word for us to think about because it almost suggests we're capacity constrained. Without question, those practices are now getting to a stage where they are full, actually. They've got clients waiting to sign up to registers. Actually part of the challenge often is space.
We know our typical model typically starts off with a two, three consult room. Your consult room number is really important, by the way, 'cause it feeds your main practice. This is why our store transformation program is actually really important because we've now got a series of partners who paid off their debt. They've been taking their dividends and they now recognize actually the best thing for them to do in terms of driving returns is now invest back in their practices. We've got really exciting opportunities ahead, not from just new, but from really driving the maturity out of our older practices. Just a really good example of this is Stockport which is 20 years old, it's one of our oldest practices, has just doubled in size.
The practice takes more money than the store, and the store's our second highest grossing store in the estate. Their challenge is space because the demand is there. Their issue is a space capacity issue. For me, this is the second wind of opportunity I see in our vet business, which is a highly engaged partner with cash to invest and needs space and support. That really comes into our own. For us, we obviously take our fee straight away from the increased revenue. I'm really excited about this. We're working with a number of partners now to look at second practices in town, expansion in store and how we really help them build the second wave of their growth.
It's not a problem by the way, it's an opportunity, and I think that's something the Vet Group are really tuned into and we're excited about. Mike, do you want to talk about puppies?
Yeah. On the answer to your question, Simon, I think, yeah, we've clearly over-indexed in terms of, I think, you know, we'd look at our total market share having grown in the year to about 24%. So 40% of all puppies and kittens coming into the business. Obviously we nearly doubled indexed on that. I think why we've done so well, I think one is the attractions of the Puppy & Kitten Club offering the range of discounts and initiatives that it does. But also don't forget if it's a new pet owner, we are the only pet care business in the U.K. where you can buy into a full range of products and services to take care of your pet. Unsurprisingly, you know, those new pet owners are spending something like 24% more than existing customers.
The reason for that of course is through that Puppy & Kitten Club, you know, we've got a deeper propensity to use the vets. Those new customers are also more inclined to have a subscription. They're buying into advanced nutrition. So for us it's been a tremendous boost to the business in the year just gone. But of course those puppies and kittens are gonna last, you know, gonna live for 10 - 15 years. So that lifetime value we've created and that tailwind of customers coming into the next couple of years is incredibly encouraging for us and, you know, that's why we're so positive and confident about the future prospects for the business.
Great. Thank you.
It appears there are no further questions. I would like to turn the conference back to Mr. Pritchard for any additional or closing remarks.
Great. Thank you, Tracy. Look, what a pleasure to deliver that set of results and, I leave the business really in, the strongest position it's ever been in. I also leave as a significant shareholder of the business. I've got to say I'm still so excited about the prospects for this business ahead and I've got every confidence in Lyssa, Mike, and the most amazing team of people and I wish them every success for the future. I'd like to thank everyone on the call for all your support and questions over the years and the grief that you've given us and helping us make a better business. Good luck everyone and I'll see you around soon. Thank you.