(Reuters) - Britain's biggest pet store chain Pets at Home Group Plc (L:PETSP) said "subdued" sales across its merchandise business offset a rise in third-quarter revenue, sending its shares down more than 9 percent in morning trading on Thursday.
Pets at Home's revenue rose 4.4 percent to 203.7 million pounds in the 12 weeks to Jan. 5.
However, comparable sales at the company's merchandise business, which sells pet food and accessories from its Pets at Home outlets and specialist high-street stores such as Barkers and Whiskers 'n Paws, fell 0.5 percent and revenue was flat.
Pets at Home's shares were down 9.7 percent at 214.7 pence at 1049 GMT making them the worst performer on FTSE mid cap (FTMC) index.
The company warned that sales in its merchandise unit were softer than anticipated but said it remained on track to meet market expectations for the year.
Pets at Home, which runs 429 stores across Britain as well as 411 small vet practices, has reaped benefits from Britons' love for pets.
Despite the slowdown in merchandise sales, the company said it was on target to open 15-20 stores and 50-60 grooming salons in the year.
Brokerage firm Liberum said, in a note, that the results were "disappointing" and a decline in like-for-like sales in merchandising could raise the need for greater discounting. The firm has a "sell" rating on the stock.
($1 = 0.8122 pounds)