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Pandemic pet boom keeps running for new top dogs

Dog Pet Shop Cleaning Foam Shampoo Canidae 1591447 Pxhere.com

The pandemic pet boom has some bark left in it. Locked-down humans adopted four-legged friends at a rapid pace during the lockdowns. This pushed global pet product sales up to $125 billion, according to Packaged Facts. But Fido will require food, treats and medicine after the vaccine arrives, and spending on services like grooming could rise. Companies that have lapped up sales still have room to run.

Chewy was best in show. The pet online retailer run by Amazon.com alumnus Sumit Singh saw its share price leap 160 per cent through mid-December, with a 46 per cent surge in net sales in the first three quarters of its fiscal year. It added 150 per cent more active users in the first three quarters than in all of 2019 – bringing the total to near 18 million. Subscription sales may make customers sticky, and increased focus on private-label products and healthcare services should fatten margins.

But bricks-and-mortar pet supply chains are a bigger question mark. PetSmart, which leveraged itself to buy Chewy for over $3 billion in 2017, said in October that the two would split. But investors balked at the refinancing, prompting S&P Global to downgrade PetSmart’s credit rating. Meanwhile, Petco is looking to go public and reduce debt. While higher same-store sales may provide a tailwind, both firms will struggle to compete with more nimble competitors that can afford to keep losing money and may need to shift further into high-margin services.

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