Petco swings to profit; enhances paid wellness program
Petco Health & Wellness Co. Inc.’s emphasis on pet health and wellness services is paying off.
The company on Tuesday reported earnings and sales that beat analysts’ estimates. It also announced the expansion of its paid annual subscription plan, Vital Care, which is designed to provide consumers with a convenient, affordable way to meet their pets' routine health and wellness needs. Currently, some 160,000 pets are enrolled in the program
Petco said that its net income totaled $29.0 million, or $0.11 per share, for the quarter ended Jan. 29, compared to a loss of $6.2 million, or $0.3 per share, in the year-ago period. Adjusted earnings per share of $0.28 beat analysts’ estimates for $0.25.
Revenue rose 13% to $1.514 billion, beating estimates of $1.484 billion. Comparable sales rose 14%. It was the chain’s seventh consecutive quarter of double-digit comparable sales growth with thirteen consecutive quarters of comparable sales growth.
For the full year, Petco’s net sales increased 18% to $5.8 billion, driven by comparable sales growth of 19%. Net income increased $190.9 million to $164.4 million or $0.62 per share. Adjusted earnings per share.
In January, Petco and Lowe’s Cos. said they are partnering on a pilot program to open in-store Petco shops inside Lowe’s stores, with 15 locations scheduled to open by the end of March. And in February, Petco announced it is partnering with Rover, an online marketplace for pet care, to connect customers with a variety of services.
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"Our results for the quarter and full year demonstrate that our focus on long-term, sustainable growth, powered by continued delivery against our strategic growth opportunities, is working," said Ron Coughlin, cairman and CEO of Petco. "We enter this fiscal year as a stronger company than ever. Our category remains strong and resilient; our competitive moats are deepening, and our world-class team is executing to deliver purpose driven performance. With an integrated omnichannel infrastructure, robust services offering including 197 veterinary hospitals, and millions of net new customers, we're well positioned to drive enhanced long-term shareholder value."
The new membership enhancements to Vita Care, which costs $19.99 per month with an annual commitment, include savings for nutrition, litter, discounts on repeat delivery and increased monthly Petco Pals rewards for members – which adds-up to annual benefits valued between $320 and $404 per year, the company said..
Petco is also launching a Vital Care affiliate program to make the membership’s routine care more accessible by extending exclusive benefits and discounts to its affiliate partners’ employees and customers. Beginning this spring, the affiliate program will launch with several partners including Rover.com, the San Diego Padres, Companion Protect, Central Pet & Garden, and more.
For fiscal 2022, Petco sees net revenue of $6.15 billion to $6.25 billion and adjusted earnings per share of $0.97 to $1. Analysts were looking for revenue of $6.088 billion and earnings per share of $0.89.
Petco operates more than 1,500 Petco locations across the U.S., Mexico and Puerto Rico, including a growing network of more than 150 in-store veterinary hospitals.
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