Quarterly growth sees Petco adding one million new customers
Petco, a leading pet care retailer, has announced impressive financial results for the fourth quarter of 2020 and the full year, demonstrating resilience and growth in the pet care industry despite economic uncertainty.
For the full year, Petco's net sales increased 11% year over year to $4.9 billion. The company added approximately 1 million new customers in the fourth quarter alone, and reported a 16.5% increase in fourth quarter net sales to $1.3 billion. Petco's full-year comparable sales also increased 11%.
The company's CEO, Ron Coughlin, stated that the company closed the year with a strong fourth quarter and that momentum has carried into 2021. Petco expects net sales to increase up to 8.7% year over year to $5.35 billion in the year ahead. On the lower end, Petco expects net sales to increase to $5.25 billion in the year ahead.
Petco's digital business grew by more than 90% in the fourth quarter, reflecting the growing shift to online purchasing. Monthly visits to Petco stores increased by 1.7% on average, according to Placer.ai's February report.
The pet category has historically shown strong resilience during economic uncertainty compared to the apparel category. This is largely due to several key factors, including emotional attachment and pet humanization, resilient pet spending trends, a focus on consumables vs. durables, and e-commerce growth alignment.
While apparel experiences greater volatility, pet spending is classified more as a necessary or emotionally driven expenditure, showing greater durability. PetCo reduced its debt by 49%, or $1.6 billion, to $1.7 billion, further bolstering its financial position.
In contrast, Chewy, an online pet retailer, reported a 45% increase in net sales to $1.8 billion in its third quarter, underscoring the growth potential of the pet care industry. Chewy's active net customer base reached 17.8 million in its third quarter.
The increase in pet ownership creates an estimated $4 billion in incremental annual demand for pet care products, providing a robust foundation for continued growth in the sector. The U.S. pet market was valued at $152 billion in 2020, underscoring its size and growth potential despite macroeconomic headwinds.
The loss includes a $17.5 million loss on the extinguishment of debt related to its IPO. Petco's net loss attributable to shareholders for the year was $26.5 million.
Sources: [1] Pet Industry Joint Advisory Council (PIJAC) [2] American Pet Products Association (APPA) [3] Central Garden & Pet Company [4] Chewy Inc.
- Petco's impressive financial results, with a 16.5% increase in fourth quarter net sales, indicate a flourishing pet care industry, even amidst economic uncertainties.
- The digital segment of Petco saw a remarkable growth of over 90% in the fourth quarter, mirroring the global shift towards online purchasing.
- The pet care industry, in contrast to the apparel industry, has shown resilience during economic uncertainty due to factors like emotional attachment, pet humanization, and e-commerce growth alignment.
- PetCo's financial position was further strengthened by a 49% reduction in debt, reducing its overall debt to $1.7 billion.
- The surge in pet ownership has created an estimated $4 billion in incremental annual demand for pet care products, providing a strong basis for continued growth in the sector.
- Chewy, another online pet retailer, also reported significant growth with a 45% increase in net sales in its third quarter, highlighting the growth potential within the pet care industry.
- With a customer base of 17.8 million active net customers, Chewy underscores the expansion possibilities available in the pet care market.
- Despite macroeconomic challenges, the U.S. pet market, valued at $152 billion in 2020, demonstrates the sector's size and potential for growth.
(Sources: [1] Pet Industry Joint Advisory Council (PIJAC), [2] American Pet Products Association (APPA), [3] Central Garden & Pet Company, [4] Chewy Inc.)
