After experiencing its 15th consecutive quarter of comparable sales growth, Petco's leadership credits much of the company’s consistent acceleration to its multichannel ecosystem. That's pretty hard to argue against when you delve into how Petco is meeting the needs of pet parents wherever they are... just check out some of these insights from the company's recent Q2 Earnings Presentation:
A vital aspect of Petco’s success is its loyal and active customer base, which grew by double digits year over year, as 325,000 net new customers were added this quarter alone. Of course, these numbers were not merely driven by passive Petco shoppers, as recurring customer revenue also grew by 54 percent year over year.
This growth was propelled by repeat deliveries, insurance, PupBox (a customizable monthly delivery of assorted pet products) and VitalCare membership which reached 282,000 in the second quarter. These members are not only signing on for the service, but increasing their visits and spending by double digits.
This exemplifies that pet parents continue to value companies that provide convenient, quality all-in-one services and subscriptions, and Petco is a step ahead by advertising the money pet parents can save through the current VitalCare 2.0 model - especially important in the current economic climate.
The company’s veterinary sector in particular has progressed exponentially this past quarter, as Petco closed its acquisition of Thrive Pet Healthcare in May, added over 600 veterinarians to its network over the last six months, opened 11 new vet hospitals during the quarter, and enhanced its online booking system.
Petco’s grooming, training and veterinary offering has resulted in a 62 percent increase of demand for services on a two-year basis. This multifaceted model allows Petco to maintain an advantage over online-only competitors by allowing pet parents to make purchases and maintain their pets’ health and well-being all under one banner.
Enhancing Pet Nutrition
The rapid premiumization of the nutrition space is another growth pattern that Petco is taking part in as its sales of consumables has delivered 37 percent growth on a two-year stack. The company is stacking its shelves with more high-end, healthy kibble brands, and launched its own exclusive brand - WholeHearted - which took more share then lower-quality, more broadly distributed brands, and experienced over 30 percent growth year over year.
Q2 also brought 10 percent growth to Petco’s digital business, with a digital customer spend now up over 20 percent year over year. This is largely due to the company’s successful fulfillment of same-day delivery orders - which reached a record number this quarter - and repeat delivery online purchases. Petco has also added 75 new brands to its online assortment so far this year, and has significantly ramped up its advertising network revenue with over 200 percent growth year over year.