Pet Valu to wind down US operations, close all 358 stores

Dive Brief:

Pet Valu, a specialty pet food and supplies retailer, will begin winding down its operations, the company said Wednesday.
As a result, the retailer will shutter all 358 of its U.S. stores, as well as its warehouses and its corporate office in Wayne, Pennsylvania, a process it expects to begin "in the coming days," according to a release. The company's website no longer accepts online orders, effective immediately.
Pet Valu Canada, a separate entity based in Ontario, will continue operations at its approximately 600 stores, franchise locations and e-commerce site. Pet Valu Canada licensed its name and contracts for certain services to Pet Valu U.S.

Dive Insight:

Pet Valu is among the latest retailers to cite lasting impacts from the COVID-19 pandemic as pushing it over the edge.

"The Pet Valu U.S. team is proud to have met the needs of our devoted pet lover customers in the U.S. for more than 25 years," recently appointed Chief Restructuring Officer Jamie Gould said in a statement. "However, the Company's stores have been significantly impacted by the protracted COVID-19-related restrictions. After a thorough review of all available alternatives, we made the difficult but necessary decision to commence this orderly wind down."

Unlike several other retailers that were forced to shutter their doors mid-March, Pet Valu, like other pet stores, remained open as it was deemed essential. However, the pandemic accelerated some trends, namely shopping online more frequently, as consumers hunkered down at home and were advised to limit trips to crowded spaces like physical stores.

Competition in the pet space had already grown in recent years, particularly from online players. Amazon launched its own pet private label, Wag, back in 2018. But even the e-commerce giant has faced steep competition from online pure-player Chewy in terms of sales. In August 2018, shortly after Wag launched, it generated some $345,000, while Chewy's American Journey brand recorded $940,000.

Chewy has been one of the few beneficiaries of the pandemic, reporting in its most recent quarter that net sales increased 47% to $1.7 billion. The retailer added 4.6 million customers year over year in the second quarter, an increase of 38%, to reach 16.6 million. According to CEO Sumit Singh, "the new active customers we added in Q1 and Q2 of this year surpassed the total active customers we added across the entirety of 2019."

Pet Valu brought on Malfitano Partners to serve as its restructuring adviser, SB360 Capital Partners to assist with liquidation sales and A&G Realty Partners to handle matters related to its U.S. real estate.