Petco has been able to continue its sales momentum and lap 2020's numbers despite heightened demand in the category last year.
The pet retailer on Thursday reported second quarter revenue grew 19% year over year, driven by a 20% rise in comparable sales. Compared to 2019, revenue grew 31%. The pet retailer's net income grew over tenfold from last year to $75 million, according to a company press release.
Petco on Thursday also named Brian LaRose as chief financial officer, replacing Mike Nuzzo, who will remain the chief operating officer and president of Petco services. Prior to joining Petco last September as its senior vice president of finance, LaRose was the CFO for HP Inc.'s 3D business unit.
The pet sector emerged as one of the unlikely winners of 2020's unpredictable year, as consumers turned to their animals for comfort. The heightened demand was further helped by the fact that the number of U.S. households with pets was projected to grow 4% last year, according to data from Packaged Facts.
And Petco has been able to continue its momentum well into 2021. The retailer added 1 million net new customers during Q2 and reported its 11th consecutive quarter of comp sales growth.
"Q2 was a quarter that truly highlighted the strength of our unique model with world-class digital capabilities, robust services offerings and a nationwide physical pet care center footprint that provides both the great in-store experience and logistics competitive advantages," Petco CEO Ron Coughlin said on a call Thursday. "Those capabilities are enabling a growing customer base that is becoming more and more valuable, with significant growth in recurring revenue customers, loyalty customers, multichannel customers and premium product and services customers."
In the second quarter, Petco's digital revenue grew 14%, while its services and vet revenue grew 49%. The retailer has leaned into its new identity as a "health and wellness company for pets," opening 18 vet hospitals in Q2, bringing its total to 155.
The increased focus on health services lends the potential to increase foot traffic in its stores and drive more loyalty, and it's something others have latched onto as well. Walmart in 2019 announced plans to open 100 in-store vet clinics, while online retailer Chewy in 2020 launched "Connect with a Vet" telehealth services.
As a result of continued strength, Petco raised its full-year guidance. Petco expects net revenue to be between $5.6 billion and $5.7 billion, up from previous guidance of $5.5 billion to $5.6 billion, and adjusted EBITDA to be between $565 million and $575 million, up from $550 million to $560 million.
But analysts caution against a potential slowdown in the back half of the year as pet adoptions stall or decline. "Pet adoptions have been a key driver of hardgoods sales growth over the past year, while pet food sales have underwhelmed possibly due to the secular shift to online pet food purchasing at larger competitors," Wedbush analysts led by Seth Basham said in an Aug. 13 note.