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Woof! San Diego's Petco files to go public - again - in $100M offering

San Diego Union Tribune logo San Diego Union Tribune 12/4/2020 Jennifer Van Grove
a dog sitting in front of a building: Ron Coughlin, Petco CEO, with his dog, Yummy, a yellow Labrador Retriever, at the company headquarters in Rancho Bernardo. (Howard Lipin / The San Diego-Union-Tribune) © (Howard Lipin / The San Diego-Union-Tribune) Ron Coughlin, Petco CEO, with his dog, Yummy, a yellow Labrador Retriever, at the company headquarters in Rancho Bernardo. (Howard Lipin / The San Diego-Union-Tribune)

Pitching itself as a much-improved health and wellness company for pets and pet parents, San Diego-based Petco is ready to return to public ownership and is eyeing as much as $100 million in proceeds from the sale of shares.

Thursday, the retailer filed its registration statement with the U.S. Securities and Exchange Commission. The company, which is headquartered in Rancho Bernardo and employs 26,000 people, plans to list its common stock on the Nasdaq Global Select Market under the ticker symbol "WOOF."

Petco has yet to disclose a price range for the offering or the number of shares it plans to make available.

"I am pleased to introduce you to a profoundly new Petco that’s redefining the pet care industry and generating a compelling growth trajectory," Petco Chief Executive Ron Coughlin wrote in a letter to prospective shareholders.

The letter touts a three-year company turnaround effort punctuated by a decision to end the sale of food with artificial ingredients, and married to an emphasis on services such as veterinary care, training and grooming. The pandemic, which has increased demand for new pets, has also aided the business, he said.

"Suffice it to say, our business was strong before the pandemic, accelerated during the pandemic, and we expect it to continue to grow at an accelerated rate long after the pandemic passes," Coughlin said.

Founded in 1965, Petco has cycled through various ownership structures over the past 55 years. It was a publicly traded firm from 1994 to 2000, and again in 2002 through 2006.

More recently, in 2015, the firm traded hands in a private equity deal that valued the brand at $4.6 billion. The buyers — CVC Capital Partners and the Canadian Pension Plan Investment Board — have since operated the firm as a Delaware limited liability company, and will maintain a controlling interest (by way of voting power) after the conversion.

The registration statement offers the first substantial look at the company's coffers in over a decade. The pet supply company now operates 1,470 brick-and-mortar locations and purports to have a regular customer base of nearly 21.5 million people. The business has improved its financial footing over the past two years.

In the 39 weeks ending on Oct. 31, Petco reported net sales of $3.6 billion, growing 9 percent over $3.3 billion in net sales during the same period in the prior year. The company is also losing less money. It improved from a net loss of around $94 million in the 2019 period to a net loss of $24.8 million in the 2020 time frame.

Petco also disclosed outstanding total debt of $3.3 billion, with proceeds from the sale of shares expected to go toward interest payments on loans.

Going forward, the San Diego firm hopes to take a larger bite out of a pet care industry that it says is valued at $97 billion in 2020 and includes 72 million households. The stated strategy is to build on a years-long effort to not only redo all of its online business but also change public perception.

"With a world-class management team filled with some of the best minds from digital, retail, and consumer brands, a unified corporate strategy, and renewed clarity in our mission — we set out on a journey to reignite the passion for pet wellness that’s been in our DNA for more than 55 years," Coughlin said in the registration statement. "With this as our foundation, our business transformation has focused on driving a differentiated merchandise strategy, building sticky services, and completely revamping our digital offerings."

Coughlin has previously credited the 2018 decision to stop carrying dog and cat food with artificial ingredients as the start of a company turnaround. A more recent decision to end the sale of shock collars was meant to build on the momentum of the natural food campaign.

This story originally appeared in San Diego Union-Tribune.

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