Petco shares reasons behind impressive 2020 results

In their annual report, they unveil some of the reasons why, according to them, they continue to grow.

One of the reasons for the growth, according to the company, is the structural advantages they developed for customer fulfillment. Their Pet Care Centers now double as micro-distribution centers, turning their national footprint of physical locations into a significant competitive asset.

Furthermore, the full-service veterinary hospitals they’re building across the country help them benefit from significant structural advantages compared to stand-alone veterinary care providers, including lower cost of acquisition and increased basket opportunities. This model enhances customer lifetime value and drives retention across the entire business.

They also believe that their owned and exclusive merchandise deepens their competitive moat and will power continued growth. Owned brands drove double-digit growth in 2020 with almost 30% penetration, further fortifying their differentiation. Together, their owned brands and brands exclusive to Petco in specific markets represent roughly half of our portfolio, not only enhancing our gross margin but also driving competitive insulation.

Some key figures from the report:

• The company now has over 20 million active customers—which grew by nearly 1 million customers in each of the third and fourth quarters of 2020
• Digital sales are up over 100%
• Services and vet up modestly despite COVID headwinds
• Brick and mortar merchandise up mid-single digits
• Adjusted EBITDA = $484 Million (14% YoY growth)
• Multichannel/category customers spend three to seven times more with us compared to single-channel customers, and this group grew by double digits in 2020.