PETCO CEO SEES COMPANY AS A COVID ‘UNICORN’
He says the pandemic pet boom has set the retailer up for long-term growth
Petco is no Peloton — and that’s a good thing, according to the pet supply company’s chief executive who recently boasted that, unlike some businesses bolstered by the pandemic, the San Diego-based brand is set up to succeed even after stay-at-home orders are long gone.
“While our lift nears other
COVID beneficiaries like mass (retail), home improvement and home goods, what makes us different is that once the garage is remodeled, you’re not going to do that again for a decade,” Petco CEO Ron Coughlin said Thursday during the firm’s first quarterly earnings conference call since returning to public ownership. “Conversely, once a cute puppy becomes a part of your home, they’ll need to be fed, they’ll need to be groomed and vaccinated for a decade or more.”
In other words, the company is a COVID “unicorn,” benefiting not only from the shutdown and the incremental addition of more than 3 million pets in homes but the reopening of the economy as well,
Coughlin said.
The remarks were meant to provide Petco shareholders with a way to frame its fiscal fourth-quarter and full-year 2020 results, which included a mixed-bag of pandemic-related takeaways. The company, for instance, noted that it spent $45 million in 2020 to not only keep its stores and distribution centers properly sanitized but provide bonuses and extra benefits to workers. The COVID costs dipped into profits.
Petco said it grew fourthquarter sales by 16 percent over the year-ago period to $1.3 billion, and generated a total of $4.9 billion in revenue for the year ending Jan. 30. It also reported a net loss of $6.2 million for the most recent quarter and $26.5 million for the full year. In addition, the company used $939 million in proceeds from its initial public offering to pay down debt. In total, Petco was able to cut its debt in half, ending the fiscal year with $1.7 billion in debt.
“When people were at home, they were depressed and they went out and found new furry friends that made them feel better . ... So we had a big step up in the number of pets, which generates annuity for the next decade,” Coughlin said in an interview with the Union-Tribune. “That’s what people got a little wrong when they grouped us with the COVID beneficiaries. Definitionally that means, when COVID is gone, the business goes
down. That’s not us. COVID actually provided a permanent lift for us.”
The message echos the pitch Petco made to prospective shareholders ahead of its IPO. Founded in 1965, Petco returned to public ownership in January, selling itself as a digitally refashioned pet health and wellness company capable of taking on Chewy.com and eating up more of a booming industry.
The digital refrain is another popular talking point
for Coughlin, who told analysts on Thursday that, in an 18-month period, Petco went from having the slowest website in the industry to a site that is as fast as, if not faster than, its competitors’ sites.
Digital sales, which grew 90 percent in the fourth quarter, now represent 15 percent to 20 percent of all sales, Coughlin told the Union-Tribune. That means a substantial portion of orders now originate on Petco.com or the company’s
mobile app, where customers can order for standard delivery or opt for curbside pickup, buy online and pick up in-store, and even sameday delivery from DoorDash.
Petco ended 2020 with 1,454 stores that it now calls “pet care centers” as they double as fulfillment centers.