As every retailer looks to define what value means to their customer, pet health and wellness company Petco is finding that offering pet parents solutions tailored to meet the standards they have for caring for their pets is the driving force in reaching its core customer base.
“The dominant macro trend is about premiumization and humanization, which is why we believe we have the best portfolio in the industry against those trends,” Petco CEO Ron Coughlin said on a Wednesday (Nov. 29) third-quarter earnings call with analysts.
Coughlin said Petco has embraced a strategy that addresses the diverse needs of pet owners influenced by factors such as price sensitivity, brand preference and other considerations.
Moreover, Coughlin underscored the success achieved by incorporating new brands and products, including fresh frozen items, exclusive options and offerings from major players in the pet food and pet treat industry. This strategic initiative has not only received positive feedback but has also enticed new or lapsed customers, resulting in increased attachment rates across various product categories.
As Petco realigns its business to better cater to pet parents, the company has looked to expand its pet healthcare services. The company has experienced double-digit growth in that area as the veterinary services teams have played a pivotal role in driving both revenue and customer expansion. Coughlin said the company currently operates a total of 282 full-service veterinary hospitals, averaging 14,181 veterinary clinics per week.
In the previous quarter, Petco underscored its commitment to fortify its business by implementing various strategic measures. These initiatives aim to unlock a targeted $150 million in cost savings and productivity enhancements by the conclusion of fiscal 2025.
“These actions, combined with the enduring competitive advantages of our differentiated offering, will position us even better to deliver sustainable and profitable growth for the long term,” Coughlin said in August.
In August, ahead of its second-quarter report, the California-based company unveiled a partnership with DoorDash, expanding on-demand delivery capabilities. This collaboration enables pet parents nationwide to access Petco’s diverse product range through the DoorDash Marketplace.
This announcement followed Petco’s collaboration with dog nutrition brand Ollie, introduced to provide human-grade dog food to Petco customers. This partnership positions Petco as the first nationwide pet retailer to offer Ollie’s products, which were previously available only online.
Before these developments, in June, the specialty retailer inaugurated its flagship one-stop store for the Pet Health and Wellness Center in New York City. This strategic move aimed to integrate the best aspects of Petco’s physical and digital offerings.
In January, Petco made headlines by consolidating its products and services into a unified membership program, the Vital Care program. This comprehensive program now encompasses products, grooming services, and veterinary care, offering customers an integrated and streamlined experience.
Read more: Petco Looks to Cost Savings to Strengthen Pet Care Business Beyond Q2
“Our third quarter results were below our expectations as we continue to navigate a challenging consumer environment and we are taking swift and decisive action to improve the performance of our business by broadening our appeal with customers and tightly managing costs and capital,” Coughlin said in a statement. “This includes the introduction of the category’s largest national cat and dog food value brands to meet the needs of all pet parents and deliver incremental profits over time.”
He cited the company’s continued growth in services, omnichannel capabilities and partners as factors that will “better position us to capture the long-term growth trends in the category and deepen our connection with all pet parents.”
In the third quarter, Petco reported flat year-over-year comparable sales, with a 4.1% increase on a two-year basis. Despite a 0.5% decrease in net revenue to $1.49 billion, the company faced a GAAP net loss of $1.2 billion per share, primarily due to a non-cash goodwill impairment charge.
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