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WOOF! Pet care retailer Petco sets terms for $744 million IPO

January 6, 2021

Petco Health and Wellness, a multi-channel pet care retailer with about 1,500 locations across North America, announced terms for its IPO on Wednesday.

The San Diego, CA-based company plans to raise $744 million by offering 48 million shares at a price range of $14 to $17. At the midpoint of the proposed range, Petco Health and Wellness would command a market value of $4.0 billion.

Petco operates a multi-channel platform made up of a physical network of 1,470 pet care stores across the US and Puerto Rico; stores average 14,000 square feet and typically carry 10,000 core SKUs. The company served 21.5 million customers in the last twelve months (+8.8% y/y). Its business model provides all facets of pet care, including dog and cat food (43% of sales for the 39 weeks ended 10/31/20), supplies and small companion animals (48%), grooming, training, pet health insurance, and a full-service veterinary platform (9% total). Private label brands represented 27% of FY20 sales. While overall store count has declined by 22 locations since the start of 2019, the company has greatly expanded the number of pet care centers with full-service vet practices over the same period to 105, as the company attempts to better compete with online retailers by offering multi-channel pet health services, which is also reflected in its rebranding from Petco Holdings to Petco Health and Wellness. After three years of flat or negative comparable store sales growth, comp growth rose to 3.9% in its latest fiscal year, and then jumped to 9.4% in the YTD period, driven by its online segment.

Petco Health and Wellness was founded in 1965 and booked $4.7 billion in sales for the 12 months ended November 1, 2020. It plans to list on the Nasdaq under the symbol WOOF. Goldman Sachs, BofA Securities, Citi, Evercore ISI, Credit Suisse, UBS Investment Bank and Wells Fargo Securities are the joint bookrunners on the deal. It is expected to price during the week of January 11, 2021.