Petco swings to profit on pet sector boom; gained 1.2 million new customers in Q1

Petco Health and Wellness Company reported a strong first quarter fueled by the pandemic-related surge in pet adoption and hiked its full-year forecast. 

The chain, which rebranded itself last October as a "health and wellness company for pets,” reported net income of $7.56 million, or $0.3 per share, for the quarter ended May 1, compared with a loss of $31.2 million, or $0.15 a share, in the year-ago period. Excluding items, earnings per share totaled $0.17, beating analysts’ expectations of $0.9 per share.

Net revenue increased 27% to $1.4 billion, better than expected.  Comp sales rose 28%. Digital revenue rose 21% during the quarter; services and vet revenue increased 63%. 

“We entered 2021 with momentum, and delivered record quarterly sales in Q1 driven by our strong execution and unique model across digital and in our Pet Care Centers," said Ron Coughlin, chairman and CEO.

In December 2020, Petco entered into a partnership with DoorDash offering customers same-day delivery of online orders. On the chain’s earnings call, Coughlin said the partnership has given Petco a competitive advantage over pure online players in the category since fulfilling orders directly from its stores is lower than the cost of shipping.

Petco raised its full-year outlook, noting that there are more pets in homes than ever and that it gained 1.2 million new customers in the quarter, providing “an annuity for years to come.”

“The category acceleration combined with a strengthening of our customer base gives us confidence to raise our full-year guidance,” said Coughlin.

Petco expects revenue this year to range from $5.48 billion from $5.58 billion, up from its prior forecast of $5.25 billion to $5.35 billion. Its outlook for earnings increased from $0.73 to $0. 76 per share, from a previous forecast of $0.63 to $0.66. 

The company ended the quarter with more than 1,500 Petco locations across the U.S., Mexico and Puerto Rico, including 137 full-service in-store veterinary hospitals.