News

Petco just went public for the third time in company history. Here’s the strategy its CEO claims separates it from PetSmart and Chewy. (WOOF)


Petco CEO Ron Coughlin

Summary List Placement

Petco is going public for the third time in its history. And this time, the company swears things are different.

The pet retailer started trading on the Nasdaq under the ticker “WOOF” Thursday. Its shares rose as high as 70% above their opening price Thursday afternoon. Petco priced its shares at $18 late Wednesday, above the range it anticipated earlier of between $14 to $17.

But Petco has been public twice before and was publicly preparing an IPO as recently as 2015. CEO Ron Coughlin told Insider that the offering will provide a way out for CVC Capital Partners and the Canada Pension Plan Investment Board, the two private investors who owned the company for the last several years.

But the proceeds from the IPO will also be used to pay off about half of the company’s debt, freeing it up to invest more in e-commerce, in-store veterinary services, and other growth areas.

“We come out stronger,” he said after Petco’s stock started trading. “We come out with lower cash dedicated to paying down debt, which enables us to fuel growth as well as tap into capital markets for great initiatives.”

Rival petcare chain PetSmart offers many of the same basic services as Petco, including veterinary appointments and automatic ordering for pet food. But Coughlin said that PetSmart has not integrated its retail stores with its veterinary clinics and Chewy, especially when it comes to sharing consumer data.

“When you go to the rest of PetSmart, they don’t have any data on what your pet’s experience was,” he said. “It might as well be a mall with a retailer inside that mall,” he said of PetSmart’s veterinary clinics, which are run by third-party provider Banfield Pet Hospital.

Petco’s Vital Care program, by contrast, offers discounts on vet care, food, grooming and other offerings through a single account, he said.

Revenue at Petco rose 9% to $3.6 billion during the company’s third quarter. Much of the retailer’s recent growth has been driven by new pet adoptions during the pandemic, including customers ordering online. 

Read more: BarkBox is reportedly going public in a $1.6 billion deal with a SPAC. These 9 DTC pet brands could be next on investors’ lists as interest grows in the $100 billion pet care space.

Founded as a mail-order business in 1965, Petco’s first stretch on the public markets lasted from 1994 until 2000, when a buyout by Texas Pacific Group and Leonard Green Partners took it private. The retailer went public again two years later, though an entity controlled by Leonard Green remained the majority shareholder.

Petco went private again in 2006 through a sale to investors led by TPG Capital. In 2015, it contemplated another IPO but ended up changing hands again, with CVC and the Canada Pension Plan Investment Board taking ownership.

Coughlin has pointed to $300 million that the company has invested over the last three years in key initiatives as evidence that Petco is trying to keep up with competitors like Chewy, PetSmart, and Amazon. Some of the most important investment areas …read more

Source:: Business Insider

      

(Visited 6 times, 1 visits today)

Leave a Reply

Your email address will not be published. Required fields are marked *