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WOOF Petco Health and Wellness

Petco is a category-defining health and wellness company focused on improving the lives of pets, pet parents and its own Petco partners. Since its founding in 1965, Petco has been trailblazing new standards in pet care, delivering comprehensive wellness solutions through its products and services, and creating communities that deepen the pet-pet parent bond. Petco operates more than 1,500 pet care centers across the U.S., Mexico and Puerto Rico, including a growing network of more than 100 in-store veterinary hospitals, and offer a complete resource for pet health and wellness online and through the Petco app. In tandem with The Petco Foundation, an independent nonprofit organization, through in-store adoption events, Petco has helped find homes for more than 6.5 million animals.

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1 Dec 21
24 Jan 22
29 Jan 22
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Lockup
424B4
17 May 21
Date Owner Security Transaction Code Indirect 10b5-1 $Price #Shares $Value #Remaining
13 Jan 22 Darren MacDonald Class A Common Stock Payment of exercise Dispose F No No 18.99 7,849 149.05K 109,953
13 Jan 22 Brian LaRose Class A Common Stock Payment of exercise Dispose F No No 18.99 3,644 69.2K 67,413
13 Jan 22 Ron Coughlin Class A Common Stock Payment of exercise Dispose F No No 18.99 28,066 532.97K 250,158
13 Jan 22 Justin Tichy Class A Common Stock Payment of exercise Dispose F No No 18.99 7,849 149.05K 56,151
13 Jan 22 John Zavada Class A Common Stock Payment of exercise Dispose F No No 18.99 5,379 102.15K 37,788

Data for the last complete 13F reporting period. To see the most recent changes to ownership, click the ownership history button above.

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Financial report summary

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Risks
  • A decline in consumer spending or a change in consumer preferences or demographics could reduce our sales or profitability and adversely affect our business.
  • The growth of our business depends in part on our ability to accurately predict consumer trends, successfully introduce new products and services, improve existing products and services, and expand into new offerings.
  • Our continued success is substantially dependent on positive perceptions of Petco, including our owned or exclusive brands.
  • Competition in the markets in which we operate, including internet-based competition, is strong and if we are unable to compete effectively, our ability to generate sales may suffer and our operating income and net income could decline.
  • We may be unable to execute our growth strategies successfully or manage and sustain our growth, and as a result, our business may be adversely affected.
  • We may experience difficulties recruiting and retaining skilled veterinarians due to shortages that could disrupt our business.
  • We face various risks as an e-commerce retailer.
  • If we fail to generate or obtain sufficient capital to finance our growth strategies, we may be unable to sustain our growth and our business may be adversely affected.
  • We depend on key personnel, and if we lose the services of any of our principal executive officers, we may not be able to run our business effectively.
  • The loss of any of our key merchandise vendors, or of any of our exclusive distribution arrangements with certain of our vendors, could negatively impact our business.
  • We face various risks related to health epidemics, pandemics, and similar outbreaks, such as the ongoing COVID-19 pandemic, which may materially and adversely affect our business, financial position, results of operations, and cash flows.
  • A disruption, malfunction, or increased costs in the operation, expansion, or replenishment of our distribution centers or our supply chain would affect our ability to deliver to our locations and e-commerce customers or increase our expenses, which could harm our sales and profitability.
  • We occasionally seek to grow our business through acquisitions of or investments in new or complementary businesses, products, or services, or through strategic ventures, and the failure to successfully identify these opportunities, manage and integrate these acquisitions, investments, or alliances, or to achieve an adequate return on these investments, could have an adverse effect on us.
  • Our reputation and business may be harmed if our or our vendors’ computer network security or any of the databases containing customer, employee, or other personal information maintained by us or our third-party providers is compromised, which could materially adversely affect our results of operations.
  • If our information systems or infrastructure or those of our vendors fail to perform as designed or are interrupted for a significant period of time, our business could be adversely affected.
  • Negative publicity arising from claims that we do not properly care for animals we handle or sell could adversely affect how we are perceived by the public and reduce our sales and profitability.
  • Pet food safety, quality, and health concerns could adversely affect our business.
  • Our real estate leases generally obligate us for long periods, which subjects us to various financial risks.
  • Changes in laws, accounting standards, and subjective assumptions, estimates, and judgments by management related to complex accounting matters could significantly affect our financial results.
  • Failure to attract and retain quality sales associates and experienced management personnel could adversely affect our performance.
  • Claims under our insurance plans and policies may differ from our estimates, which could adversely affect our results of operations.
  • Resistance from veterinarians to authorize prescriptions or attempts/efforts on their part to discourage pet owners from purchasing from us could cause our sales to decrease and could adversely affect our financial condition and results of operations.
  • Our results may be adversely affected by serious disruptions or catastrophic events, including public health issues, geopolitical events, and weather.
  • Our operations are subject to extensive governmental regulation, and we may incur material liabilities under, or costs in order to comply with, existing or future laws and regulations. Our failure to comply with such laws and regulations may result in enforcements, recalls, and other adverse actions that could disrupt our operations and adversely affect our financial results.
  • We are subject to risks related to online payment methods.
  • Our marketing programs, e-commerce initiatives, and use of consumer information are governed by an evolving set of laws and enforcement trends, and changes in privacy laws or trends, or our failure to comply with existing or future laws, could substantially harm our business and results of operations.
  • We face the risk of litigation resulting from unauthorized text messages sent in violation of the Telephone Consumer Protection Act.
  • Product recalls and product liability, as well as changes in product safety and other consumer protection laws, may adversely impact our operations, merchandise offerings, reputation, financial condition, results of operations, and cash flows.
  • Failure to establish, maintain, protect, and enforce our intellectual property and proprietary rights or prevent third parties from making unauthorized use of our technology or our brand could harm our competitive position or require us to incur significant expenses to enforce our rights.
  • We may be subject to intellectual property infringement claims or other allegations, which could result in substantial damages and diversion of management’s efforts and attention.
  • We are party to routine litigation arising in the ordinary course of our business and may become involved in additional litigation, all of which could require time and attention from certain members of management and result in significant legal expenses.
  • We are subject to environmental, health, and safety laws and regulations that could result in costs to us.
  • We may fail to comply with various state or federal regulations covering the dispensing of prescription pet medications, including controlled substances, through our veterinary services businesses, which may subject us to reprimands, sanctions, probations, fines, or suspensions.
  • Our substantial indebtedness could adversely affect our cash flows and prevent us from fulfilling our obligations under existing debt agreements.
  • The agreements governing our indebtedness include restrictive covenants that limit our operating flexibility, which could harm our long-term interests.
  • Despite current indebtedness levels, we may incur substantial additional indebtedness in the future. This could further increase the risks associated with our substantial leverage.
  • To service our indebtedness, we will require a significant amount of cash. Our ability to generate or access cash depends on many factors beyond our control.
  • The amount of borrowings permitted under the ABL Revolving Credit Facility may fluctuate significantly, which may adversely affect our liquidity, results of operations, and financial position.
  • Our variable rate indebtedness subjects us to interest rate risk, which could cause our indebtedness service obligations to increase significantly.
  • A ratings downgrade or other negative action by a ratings organization could adversely affect the trading price of the shares of our Class A common stock.
  • Changes affecting the availability of LIBOR may have consequences for us that cannot yet be reasonably predicted.
  • Our Sponsors have significant influence over us, including control over decisions that require the approval of stockholders, which could limit your ability to influence the outcome of matters submitted to stockholders for a vote.
  • We are a “controlled company” within the meaning of the Nasdaq rules and, as a result, qualify for, and rely on, exemptions from certain corporate governance requirements. Accordingly, the holders of our Class A common stock do not have the same protections as those afforded to stockholders of companies that are subject to such governance requirements.
  • Certain of our directors have relationships with our Sponsors, which may cause conflicts of interest with respect to our business.
  • Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of us more difficult, limit attempts by our stockholders to replace or remove our current management, and may adversely affect the market price of our stock.
  • Since we have no current plans to pay regular cash dividends on our Class A common stock, you may not receive any return on investment unless you sell your Class A common stock for a price greater than that which you paid for it.
  • We are a holding company with nominal net worth and will depend on dividends and distributions from our subsidiaries to pay any dividends.
  • The multi-class structure of our common stock may adversely affect the trading market for our Class A common stock.
  • Our certificate of incorporation designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, and the federal district courts as the exclusive forum for Securities Act claims, which could limit our stockholders’ ability to obtain what such stockholders believe to be a favorable judicial forum for disputes with us or our directors, officers, other employees, or agents.
  • An active, liquid trading market for our Class A common stock may not develop, which may limit your ability to sell your shares.
  • Our operating results and share price may be volatile, and the market price of our Class A common stock may drop.
  • Your percentage ownership in us may be diluted by future issuances of capital stock, which could reduce your influence over matters on which stockholders vote.
  • A significant portion of our total outstanding shares are restricted from immediate resale but may be sold into the market in the near future. This could cause the market price of our Class A common stock to drop significantly, even if our business is doing well.
  • If securities or industry analysts do not publish research or reports about our business, if they adversely change their recommendations regarding our shares, or if our results of operations do not meet their expectations, our share price and trading volume could decline.
  • If our operating and financial performance in any given period does not meet the guidance that we have provided to the public or the expectations of our investors and analysts, our Class A common stock price may decline.
  • If our internal control over financial reporting or our disclosure controls and procedures are not effective, we may be unable to accurately report our financial results, prevent fraud, or file our periodic reports in a timely manner, which may cause investors to lose confidence in our reported financial information and may lead to a decline in our stock price.
Management Discussion
  • Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
  • We are a beloved brand in the U.S. pet care industry with more than 55 years of service to pets and the people who love and care for them. Since our founding in 1965, we have been developing new standards in pet care, delivering comprehensive wellness solutions through our products and services, and creating communities that deepen the pet-parent bond. Over the last three years, we have transformed the business from a successful traditional retailer to a disruptive, fully integrated, digital-focused provider of pet health and wellness offerings. We revamped our leadership team and invested over $375 million to build out leading capabilities across e-commerce and digital, owned brands, data analytics, and a full suite of on-site services including veterinary care.
  • Our go-to-market strategy is powered by a multi-channel platform that integrates our strong digital presence with our nationwide physical network. Our data-driven digital footprint, consisting of an entirely redesigned e-commerce site and personalized mobile app, delivers an exceptional customer experience and serves as a hub for pet parents to manage their pets’ health, wellness, and merchandise needs, while enabling them to shop wherever, whenever, and however they want. By strategically leveraging our extensive physical network consisting of approximately 1,454 pet care centers located within three miles of 53 % of our customers, we are able to offer our comprehensive product and service offering in a localized manner with a meaningful last-mile advantage over our competition. Through our connected platform, we serve our customers in a differentiated manner by offering the convenience of ship-from-store, BOPUS, curbside pick-up and same day delivery.  Multi-channel customers, who spend between 3x to 7x more with us compared to single-channel customers, increased by double-digits in fiscal 2020.
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