Petco’s CEO Believes the Pet Care Boom Will Endure in 2021

Of all the retail companies to IPO this week, my eye went to the one with a furry special guest. And first trading day zoomies.

Under ticker WOOF, Petco shares jumped as much as 72% in their Nasdaq debut. Petco raised $864 million in its IPO, funds that’ll go toward debt repayment and expansion.

Pet adoptions and purchases have soared over the past year, but there’s mastiff competition for retail companions. In an interview yesterday, Petco CEO Ron Coughlin gave Retail Brew a glimpse at the strategies across Petco’s stores—sorry, “pet care centers”—that have investors’ tails wagging.

Experiential upgrades. Across Petco’s 1,470 stores, 100+ have full veterinary hospitals. Results from those centers, paired with upgraded grooming services and premium brands, hint more renovations could come soon.

• “There’s a 4% lift in center-store sales from the increased traffic and veterinary business” in these locations, Coughlin said.
• “We’re seeing guest satisfaction levels at a 9.3 out of 10 when we bring these in.”

Quality selection. People who call their pets “fur babies” aren’t buying them standard grade kibble.That’s encouraged Petco to double down on exclusive products: Last year, more than half of its product assortment wasn’t available at competitors.

• Coughlin said selling premium, fresh pet food = doubled visits to stores.
• I asked if Petco had explored exclusive sales partnerships with new DTC pet care brands. Coughlin’s response: “We are always on the hunt for new brands.” 👀

Convenience factor. Petco has invested $300+ million in its digital opps, spanning app updates, curbside pickup, and same-day delivery. Across all e-comm, 80% of orders are fulfilled through Petco’s stores.

• Same-day delivery has only been live for five weeks, but Coughlin said 30% of all online orders are fulfilled with this option.

Chew on this

Pet care was already more reliable than home goods or apparel. But Coughlin believes the pet adoption wave benefiting Petco is far from over.

“We anticipate the first half of 2021 [will look] similar to 2020, in terms of the dynamics of people being home and adoption levels being high,” Coughlin said. “So what’s unique for us is these pets and homes are like an annuity to our business.”