A Petco Health and Wellness Inc. sign is installed outside the Nasdaq Market site during the company’s initial public offering (IPO) on Thursday, January 14, 2021 in New York, USA.
Michael Nagle | Bloomberg | Getty Images
Petco announced Wednesday that Chief Executive Officer Ron Coughlin will step down, and board member and Best Buy executive R. Michael Mohan will serve as interim CEO as the company searches for a permanent replacement. ) was announced.
Coughlin will serve as an advisor to the board to “assist with the leadership transition.” He said in his statement that he is proud of the work he has done over the past five years.
“It has been a once-in-a-lifetime opportunity to work with incredible partners through a period of incredible change and growth,” Coughlin said. “We’re proud of the differentiated business model we’ve built to provide the best for pets. This positions us well for the future.”
Mr. Mohan has been a director of the company since March 2021. He previously served as lead independent director, a role he will relinquish when he takes over as interim CEO. He is also the former Chief Operating Officer and President of Best Buy.
“Mike’s track record of significant success in multiple areas of the retail industry, deep knowledge of Petco, and strong operational skills will ensure a seamless transition as Petco moves forward,” Cameron Breitner, a member of Petco’s board of directors, said in a statement. He is the ideal executive to ensure the transition.”
Petco announced Wednesday that its fourth quarter results were also largely in line with expectations.
Here’s how the pet retailer performed compared to Wall Street expectations, based on analyst research by LSEG (formerly Refinitiv).
- Earnings per share: adjusted 2 cents, forecast 2 cents
- Revenue: $1.67 billion vs. $1.62 billion expected
The company reported a net loss of $22.6 million, or 8 cents per share, for the three months ended Feb. 3. In the same period last year, the company reported net income of $32.7 million, or 12 cents per share. Excluding one-time items, Petco reported earnings per share of 2 cents.
Sales were $1.67 billion, an increase of about 6% from $1.58 billion in the same period last year.
The company’s stock rose as much as 9% in pre-market trading on Wednesday following the CEO change and earnings release.
Coughlin’s decision to step down comes as Petco’s market capitalization has declined over the past year, even though the company has reported consistent and comparable sales growth. As of Tuesday’s close, Petco’s stock price was down about 19% since the beginning of the year, and its market capitalization was about $784 million, down from about $3 billion as of February 2023.
The pet industry has faced pressure and struggled with weak demand after the pandemic-induced boom petered out. A record number of families adopted pets during the coronavirus pandemic, and the subsequent need for supplies to support those animals generated huge profits for retailers like Petco and Chewy.
However, new introductions have since slowed down. Over the past year, Chewy and Petco have seen strong sales in stable categories such as pet food and pharmaceuticals, but weak demand for higher-margin products such as beds, leashes and toys.
Mr. Coughlin has played a key role in transforming Petco into a health and wellness company since becoming CEO in 2018. Under Mr. Coughlin’s direction, the company stopped selling unhealthy pet food, removed products such as shock collars, and began expanding its offerings. services and veterinary business.
In 2020, the company changed its name to Petco Health and Wellness Company. The following year, Coughlin led the company to an IPO.
Ron Coughlin, chief executive officer of Petco Animal Supply, Inc., outside the Nasdaq Market site during Petco Health & Wellness, Inc.’s initial public offering (IPO) on Thursday, January 14, 2021, in New York, USA. right).
Michael Nagle | Bloomberg | Getty Images
Petco built a veterinary hospital on a large brick-and-mortar site. Petco is currently one of the nation’s largest pet healthcare providers, operating 282 full-service hospitals as of the end of last year.
According to Bloomberg Intelligence, pet health care and the high profit margins associated with it are important factors for the overall pet market and are driving growth in spending in the United States. Revenue from Petco’s services business increased 17% in the quarter, but it accounts for a small portion of the company’s overall revenue. These investments will take time to recoup, and Wall Street is clearly growing impatient with Petco’s direction.
“I look forward to working with our management team and partners to continue to strengthen our business and drive profitability through operational discipline and execution that generates cash to improve growth, increase margins and create shareholder value,” Mohan said in a statement. I’m looking forward to it.” “My focus is on our people, business operations and customer experience as we work together to drive our strategy.”
