How do you think re-privatizing the company will help PETCO’s performance? Or do you think it could hurt the company overall?
PETCO Animal Supplies Inc., one of the nation’s largest pet supply specialty retailers, boasts over 950 stores nationwide. Its pet-related products include food, supplies, grooming supplies, toys, novelty items, vitamins, small pets (excluding cats and dogs), and veterinary supplies. PETCO aims to offer its customers a complete assortment of pet-related products and services at competitive prices along with superior customer service on location and through its company website. While PETCO is one of the largest pet stores in the country today, it began as a much more specialized business. Walter Evan founded the company in 1965 under the name United Pharmacal Co (UPCO) as a mail-order veterinary-supply store. In 1976, UPCO opened its first bricks and mortar retail store in La Mesa, CA, selling quality pet and veterinary supplies at discounted prices directly to animal professionals and the public. In 1979, UPCO became PETCO. Today, the company’s vision is to promote the well-being of companion animals and to support the human–animal bond. The company aims to provide a broad array of premium products, companion animals, and services along with a fun and exciting shopping experience with the help of its 22,000 employees.
PETCO stores offer a broad merchandise selection, convenient locations, and knowledgeable customer service. PETCO believes this combination makes its stores stand out and provides a competitive advantage. The principal store format is a 12,000-to 15,000-square-foot building, located near local neighborhood shopping destinations such as supermarkets, bookstores, coffee shops, and dry cleaners. Each store contains approximately 10,000 pet-related items and offers grooming, obedience training, veterinary services, and pet adoptions for cats and dogs in conjunction with local animal welfare organizations. PETCO has long felt that its stores are well positioned, both in terms of product offerings and location, to benefit from favorable long-term demographic trends: a growing pet population and an increasing willingness to spend money on pets.
However, the 2008–2009 recession has forced many pet owners to pare back their petrelated expenses. Nevertheless, PETCO’s main competitor, PetSmart, has actually seen an increase in business since 2008, some of which appears to be at the expense of PETCO.
PETCO made history in 2006, becoming one of the largest public companies to be re-privatized. The company was purchased by private equity group Leonard Green & Partners and Texas Pacific Group for $1.8 billion. This is the second time these buyers have taken the firm private. Petco privatized in 2000, only to be taken public again in 2002. The company announced that the privatization would help it achieve its goals in an environment of tough competition and rising costs.