A customer walks out of a Petco store in Clark, New Jersey.
Ron Antonelli | Bloomberg | Getty Images
Petco CEO Ron Coughlin said Wednesday that the specialty retailer has a key advantage in an uncertain environment: Americans spend on pets, even when their budgets are tight.
On an investor day in New York City, he said the pet class was “resilient in the face of economic downturns, and resilient in the face of inflation.”
Additionally, he said, more people have adopted pets during the pandemic, moving to larger homes with yards and spending more time working from home. He compared the dynamic to the baby boom, saying the need for food, veterinary care and more will last beyond the global health crisis.
Petco wants to capture a larger portion of the growing market. It estimates that the pet industry drove $72 billion of demand last year, and said it will grow 7% by 2025 — with double-digit growth in premium pet care. Competitors, including Chewy and Walmart, have also ramped up their investment in the pet industry by launching new services from virtual vet visits to pet insurance.
To stand out in a crowded field, Petco has combined its own label offerings, expanded veterinary care and other pet services, and attracted clients willing to splurge on everything from trendy apparel to fresh, organic foods while treating dogs, cats, hamsters and other pets as family members.
It has nearly 200 full-service veterinary hospitals at the end of the fiscal year and plans to increase its number to 900, said Mike Nozzo, chief operating officer, on Wednesday. It also encourages customers to get pet supplies and services from its stores through a subscription service called Vital Care, which offers unlimited veterinary testing and discounts on food and personal care, for $19.99 per month.
Thursday’s investor day was Petco’s first since its return to the general market in early 2021. Shares of the traditional retailer have grown 7% since then.
Its shares were down about 1.6% Thursday morning, amid a broader market slide.
Petco on Investor Day reiterated its previous forecast for the next year. The company said it expects between 97 cents and $1.00 in adjusted earnings per share on net revenue of $6.15 billion to $6.25 billion.
This is an increase from Petco’s net sales of $5.81 billion in the previous fiscal year. This growth is roughly in line with Wall Street expectations. Analysts expect 99 cents of adjusted earnings per share on revenue of $6.2 billion, according to Refinitiv.
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