UPDATE: January 20, 2021: After its public debut last week, Petco on Tuesday announced it has closed its IPO of 55.2 million shares priced at $18 per share. The retailer said it raised around $939 million in net proceeds, after deducting underwriting discounts and commissions
UPDATE: Jan. 7, 2021: As Petco heads toward an initial public offering, it plans to list its 48 million shares on Nasdaq at $14 to $17 a share, which would raise up to $816 million and make overall valuation in the range of $4 billion, according to a securities filing.
After the IPO, the company would be controlled by its current private equity sponsors, CVC Capital Partners and the investment arm of the Canadian Pension Plan, which will own a majority of the voting shares in Petco. Much of the proceeds from the IPO will be used to pay down Petco's debt, according to the filing.
Petco on Thursday filed an S-1 for an initial public offering with the Securities and Exchange Commission.
The specialty pet retailer said it plans to be listed on the Nasdaq under ticker symbol "WOOF," but has yet to determine the price or number of shares to be offered, according to a company press release.
- Petco went public twice before, in 1994 and 2002. It filed IPO papers in 2015, but was instead sold to its current owners, private equity firm CVC Capital Partners and the Canada Pension Plan.
Petco plans to return to the public stock market once again as the pet category emerges as one of the few beneficiaries of the coronavirus pandemic.
While much of the retail industry has faltered — some even being pushed into bankruptcy — pet retailers remain relatively unscathed as consumer spending on pets surges.
Petco in its filing said that "as a result of the COVID-19 pandemic, the industry is experiencing a significant increase in demand that is expected to be a tailwind for years to come," adding that the number of U.S. households with pets is expected to grow 4% this year, citing data from Packaged Facts.
Chewy, which filed to go public last year, has experienced record growth this year. In its most recent quarter, the pet e-tailer's net sales grew some 47% to $1.7 billion, while its active customers grew 37.9% year over year to 16.6 million, breaking the company's previous customer acquisition record from the quarter prior. CEO Sumit Singh also said that "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."
Petco revealed that it has over 21 million active customers and in the 39 weeks ended Oct. 31, its net sales increased 9% from last year, while its comp sales increased 9.6%. During the same period, its operating income grew 83.5% to $127.4 million.
But even as these pet retailers saw a boost at the start of the pandemic when consumers turned to their pets for comfort, not all were exempt from the pandemic's impacts. Pet Valu last month announced it would wind down its U.S. operations, closing all 358 of its stores. And Petco itself, while seeing sales increase this year, still carries some $3.3 billion in debt.
That said, S&P Global analysts in September raised their outlook for Petco after it beat second quarter expectations and was able to boost its margins and expand e-commerce sales.