Special Report: Petco
Petco remains a dominant force within the industry. Unlike many retailers, circumstances that negatively impact the pet industry landscape don’t agitate Petco or distract the company to veer off course. Instead Petco leaders have remained disciplined and locked in on their goals to stay in lockstep with pet owners and keep pet care solutions and services attainable and cost effective.
This year, the company endured a leadership shake up of its executive team and was blindsided when pet owners – who have historically splurged on their pets – decided to scale back their pet spending dollars considering the weak economy and uncertain workforce. Despite the unexpected drop in sales, Petco leadership never missed a beat and concentrated on tweaking its prices to reflect consumers’ shopping habits.
The company also made progress with building a solid and cohesive executive leadership team and furthering its sustainability goals to leave the environment’s resources in better shape than they found it. Even with obstacles in their path, Petco leadership remained intent on promoting responsible and accountable pet ownership, most notably by offering clean products at economical prices and services such as in-store grooming, health insurance and mobile vaccine clinics so that pet owners could take a sensible approach to caring for their pets.
Company
For nearly 60 years, Petco has empowered pet owners to properly care for their pets and held a pivotal role in helping enhance the quality of pets’ lives. Petco has challenged itself to continually raise the bar and set expectations and standards of safety and quality higher. Petco operates more than 1,500 stores – or pet care centers – throughout the US, Mexico and Puerto Rico that provide product solutions, companion animals, grooming and training services and a network of brick-and-mortar and mobile veterinary clinics. All these facets make responsible pet ownership accessible and priced for pet parents. Through the company’s website and phone apps, Petco finds ways to engage with and be available to discerning pet owners in the medium the pet owners prefer to communicate through. Further, the independent nonprofit organization Petco Love strives to advocate for local animal welfare groups throughout the US and find homes for 7 million pets through adoption events.
Long-Standing Partnerships
Petco is a proven partner for leading manufacturers in the industry.
Starmark Pet Products and Petco for example have partnered together for 20 years with the shared goal of deepening the pet-parent bond.
“We both share the objective of improving the lives of our pet companions through quality products and services that are accessible to all pet parents,” said Marketing Director Emily Benson.
As a manufacturer, it’s meaningful to work with retailers that believe in your products.
“Oftentimes, Petco is among the first to commit to bringing Starmark innovation to a national scale,” Benson said. “We also have an annual opportunity to educate their store management on why pets need mental stimulation products. This, in turn, leads them to educate their customers on not only our products, but our message of keeping pets mentally and physically stimulated for a happier, more fulfilled life. There are few outlets with that type of direct influential reach.”
Petco and Starmark Pet Products share a variety of like-minded goals and values that strengthen the companies’ compatibility.
“Petco shares many of Starmark’s core values of improving the wellbeing of our pet companions through enrichment for their whole lifetime,” Benson said. “We also share a common goal of keeping pets happy in their homes through training and education, and health and wellness, as well as advocating for helping homeless pets.”
“Petco is an iconic brand in the pet care category and a leading retailer of animal health and wellness products in communities all over the United States,” said Amy Cairy, Vice President of Marketing, W.F. Young. “Their focus on meeting the needs of today’s pet parents and delivering quality products that deliver what pet parents want, how they want it, when they want it helps ensure W.F. Young’s brands are in front of their customers in the moments that matter to them.”
“For nearly 60 years, Petco has earned the trust of pet parents by delivering a curated assortment of quality products at a national scale. Leveraging that trust, Petco’s 1500-plus stores, robust eCommerce platform, deep knowledge of their customers, and access to performance metrics and POS data helps brands like W.F. Young bring the exciting new products to market pet parents are looking for to the market at a rapid pace while supporting sustainable growth,” Cairy added.
“W.F. Young and Petco share a common goal of improving the wellness of pets and this alignment of core philosophies provides strength and synergy to our partnership,” Cairy explained on what makes the two companies compatible. “With their commitment to being at the forefront of pet care and their ability to support the health of millions of pets across the country, Petco is a key partner for helping W.F. Young achieve our mission of reimagining animal health and building a world of healthier animals and happier humans.”
News
At the beginning of the year, Petco and pet insurer Nationwide teamed up to offer a customizable health insurance policy to help keep pet insurance affordable and attainable for pet parents. Through Petco’s website, pet owners can create an insurance policy that reflects the unique needs of their pet at a price they can budget for.
The Petco | Nationwide pet insurance offers essential coverage for out of the ordinary veterinary expenses because of accidental injuries such as broken bones, lacerations, poisoning and other accidents. Under the plan, pet owners can select optional coverage for veterinary expenses associated with diagnosing and treating illnesses and diseases. For ongoing care, coverage is available to help with the costs of routine and preventative care including checkups, vaccines, flea and tick prevention and select procedures.
Pet owners can opt for plans for their dogs, cats, birds, reptiles and rodents.
“We’re thrilled to pair our most flexible pet protection solution with Petco’s veterinary services to offer convenient, unified care within Petco’s complete ecosystem,” said Mariel Devesa, Head of Growth, Expansion and Development for Nationwide pet insurance. “This latest expansion of our partnership with Petco delivers integrated and affordable pet health and protection that will enable more pet parents to ‘say yes to the vet.’”
“Increasing access to high-quality, affordable and seamless veterinary care is a key component of Petco’s mission to improve lives,” said Petco Chief Veterinarian Dr. Whitney Miller. “The customizable, data-driven pet insurance and care solutions we co-developed with Nationwide are designed to help families of all budgets and areas of the country prioritize their pets’ immediate and long-term needs through our 360-degree health and wellness ecosystem.”
When Petco officials analyzed the company’s financial results on a micro and macro scale, scrutinizing results for the fourth quarter and the full picture of the 2023 fiscal year, they took note of consumers’ unexpected about-face when it comes to spending on their pets.
For more than a decade “humanization of pets” has been characterized by pet owners’ unwillingness to scrimp on their pets. While pet owners went without, they continued to offer uninterrupted care for their pets – regardless of financial constraints on their wallets. Industry analysts pointed out during the pandemic, many households adopted pets and had pocket money which benefitted pet retailers. However, in the face of inflation and government funding that was dispersed to households during the pandemic, consumers are tightening their belts and spending less on their pets.
In March, Petco officials realized pet owners were surprisingly scaling back on their pet-related expenses, however Petco didn’t reflect the change in behavior with discounted products. To realign itself with pet parents, Petco reportedly focused on reintroducing value brands throughout its consumables offerings in addition to a more varied assortment of price points throughout categories.
“We have not adapted quickly enough to recent changes in consumer preferences,” interim CEO Mike Mohan said in media reports at the time. “First, we did not anticipate the magnitude of the shift of value in both are consumables in discretionary business, and second, we did not expect customers to pull back as quickly as they have and for this duration when spending on discretionary items.”
Amid dipping sales, Petco officials in May introduced a three-pronged game plan to spur pet spending. Earnings showed a 1.7 percent decline in net revenues compared to the same time last year.
Mohan pledged to regain financial footing through a new operating model. Additionally, Petco planned to take a hard look at its approach to pricing and assortment within its merchandise selection.
“Designed to improve traffic, basket and overall quality of sales, this review is focused on better aligning our in-store and online merchandising to meet the needs of all pet parents, while driving long term profitable growth,” Mohan said in reports.
Finally, the company vowed to finetune its marketing initiatives to enhance community engagement with the intent of connecting with pet owners so that they are subsequently incentivized to visit Petco store locations and browse the company’s website.
In June, Petco shared its 2023 Environmental, Social and Governance (ESG) report, outlining headway the company has made regarding its mission of enhancing pets, pet parents and employees’ lives.
“Our commitment to making a positive impact on the lives of pets, people, and the planet we all share is pivotal to our mission as a purpose-driven pet retailer,” said Chief ESG and Communications Officer, Benjamin Thiele-Long. “By making meaningful progress on ESG pillars that matter to our stakeholders, we continue to fuel the great enthusiasm our Petco partners bring to work, differentiate our business, and grow the deep connection we have with the customers and communities we serve.”
Through an alliance with independent nonprofit organization Petco Love, which celebrated 25 years in 2024, Petco found homes for 142,924 pets during the 2023 fiscal year. Petco Love’s Vaccinated and Loved initiative achieved a milestone of supplying 2.2 million free vaccines to pets in under-resourced communities. Further, to advocate for animals across the US, Petco Love donated $33.5 million in grants to 2,000 local shelters and animal welfare organizations.
Petco also broadened its network of in-store veterinary hospitals to more than 280 locations to further its goals of making high-quality, affordable veterinary care accessible. These locations provide a range of pet care solutions, such as surgeries, illness care, labs and diagnostics. Meanwhile, by the end of 2023, the mobile Vetco Vaccination Clinics had served communities at an average rate of 1,400 weekly clinics.
The company kicked off an initiative to offer clean grooming products – that is products void of parabens, phthalates and chemical dyes, with a label signifying to pet owners which grooming services and products meet this criteria. The launch of this initiative made Petco the first US omnichannel pet retailer to provide grooming products and services that enable pet owners to decide which types of products to bathe their pets with.
As for enhancing company culture, Petco climbed the ranks of the S&P Global Corporate Sustainability Assessment. Ranking in the top 8 percent of retailers in North America, Petco climbed up four percentile points from 2023. Further, Petco scored a 95 out of 100 in Human Rights Campaign’s Corporate Equality Index; which is the national yardstick for measuring corporate policies, practices and benefits regarding LGBTQ+ employees.
Last year 400 new hires and recently promoted staff embarked on a Leadership Essentials program which allowed them to flex their strengths and skills while promoting continual improvement in peer-to-peer workshops, a leadership program and coaching.
Sustainability and environmental stewardship are part of an ongoing industry wide dialogue. To do its part, Petco tested out a recycling program that specifically prevents unrecyclable plastic from ending up in landfills.
To maximize efficiencies, the company utilized existing shipment logistics between Petco locations and distribution centers to transport plastic materials like bags, cling wrap and other product-wrapping materials to a specialized plastic recycling center to repurpose them into composite decking material for commercial and residential use.
As a result, Petco recycled more than four tons of LDPE plastic, with zero incremental carbon footprint or labor within six months. The pilot program has since been deemed successful and will transition to standard operations for Petco locations across the country. This program is anticipated to divert roughly 150 tons of plastic from landfills per year.
“Our LDPE plastic recycling program is a great example of the sustainability mindset embedded in Petco’s operations and the key role our Petco partners play in improving our processes to help preserve the wellbeing of our planet,” said VP of Sustainability Francesca Mahoney. “We will continue prioritizing these efforts so pets and pet parents can thrive in healthy environments for generations to come.”
Leadership
This year Petco has constructed a cohesive leadership team.
In early 2024, Holly May was appointed Chief Human Resources Officer. May was tasked with driving an HR strategy that delivers profitable growth and outstanding performance and is grounded in Petco’s mission to improve lives for pets, pet parents and Petco partners.
“Our knowledgeable and passionate partners (employees) are Petco’s most valuable asset and differentiator — everything we do begins with their expertise and ability to deliver hands-on pet care,” then CEO Ron Coughlin said at the time. “Holly brings an impressive track record of driving comprehensive HR strategies that align with business objectives and deliver transformational growth. On behalf of the entire Petco leadership team, we look forward to working alongside her to continue supporting our 29,000 purpose-driven partners.”
May has 20 years of experience in human resources building innovative programs, policies and practices. She supports fair and progressive HR policies, mental health and fostering inclusive workplaces that care for team members as whole people.
“I’ve had the pleasure of meeting many Petco partners, and I’ve directly observed their passion for taking care of pets and pet parents,” she said. “I look forward to helping this high-impact team further harness that passion to fuel both personal and business growth across the organization.”
May previously served as EVP and Global Chief Human Resources Officer for Walgreens Boots Alliance where she led all aspects of the organization’s global HR and ESG functions. She also held executive leadership roles at Starbucks, Abercrombie & Fitch and Visa.
Michael “Mike” Mohan was appointed Petco’s interim CEO in March, following Ron Coughlin stepping down from the role.
“Mike’s highly successful track record across multiple segments of the retail industry, deep knowledge of Petco, and strong operational skills make him the ideal executive to ensure a seamless transition as Petco moves forward,” said Cameron Breitner, Petco board member.
A Petco board member and lead independent director since 2021, Mohan’s career took him to a variety of industries. He previously served as president and chief operating officer for Best Buy, Vice President and General Merchandising Manager for Good Guys and Mohan spent time with Future Shop in Canada before it was acquired by Best Buy.
“Petco is a powerful brand with an unparalleled offering that meets every need for pets, providing necessary products and services for these family members each day to support their health and wellness,” Mohan said. “I have a deep belief in our purpose and I look forward to working with the leadership team and our partners to continue strengthening our business, driving profitability through operational discipline and execution that will improve growth, drive margin and generate cash to create shareholder value. My focus will be on our people, our operations and our customer experience, working together to advance our strategy.”
James Roth was appointed as Chief Stores Officer and Shari White was appointed Interim Chief Merchant in May in a company-wide effort to ease decision making, whittle priorities to a clearer set and position Petco to operate with enhanced speed and agility. Other notable additions to Petco’s Executive Leadership team include Tim Buckenberger, SVP, Merchandise Planning, Inventory and Supply Chain; Steve Janowiak, VP Digital and Stephen Reyes, SVP, Services.
“These changes to our leadership team will accelerate Petco’s initiatives to drive retail excellence as we execute on our operational reset,” said Mohan. “Across the business, we are streamlining the organization to empower faster and more effective implementation of best practices on the path to restoring our profitability.”
As Chief Stores Operator, Roth is tasked with leading operations across all Pet Care Centers in the United States and Puerto Rico. He recently served as Executive Vice President, Stores for Abercrombie & Fitch Co., where he led the stores team across five brands, 16 countries and more than 800 stores. He has held several senior retail roles throughout a career spanning more than two decades.
On a related note, Justin Tichy left Petco, and the role of Chief Operating Officer was eliminated after he resigned. Meanwhile, Amy College, Chief Merchandising and Supply Chain Officer, role was terminated and she was expected to leave the company in late summer.
White joined Petco in 2018 after leaving Perrigo, where she served as Director of Sales, Target. She previously worked in merchandising and brand management roles at Target and Unilever.
Joel D. Anderson was tapped Petco’s new CEO in July.
“Joel is an inspirational leader and a highly experienced retail CEO,” said Glenn Murphy, Executive Chairman of the Board of Directors. “Over the course of his impressive career he has demonstrated the ability to build and lead great teams while creating significant shareholder value. I look forward to working closely with him as he leads Petco’s initiatives to improve operating and financial results.”
“I am excited to join Petco at a pivotal time as we reposition the business for a stronger future,” said Anderson. “Petco is the leader in pet health and wellness and I see many opportunities to improve performance. I look forward to working closely with Glenn, the leadership team, and the Board of Directors to create value for all our stakeholders.”
Anderson joined Petco with more than 30 years of industry experience. Most recently, Anderson served as the CEO of Five Below and as the President and CEO of Walmart.com and before that as divisional Senior Vice President of the Northern Plains division of Walmart stores. Anderson currently serves as a director of Sprouts Farmers Market and is a member of the audit and compensation committees.
This year, Petco leaders have continuously proven that their discipline and focus have allowed the company to stay on course regardless of the circumstances occurring around them. This approach to leadership and customer service have kept Petco at the forefront of the industry.
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