PetSmart Investors Prodded by Labor Group Over Worker Safety
Worker Group Seeks Investor Ears Over PetSmart Safety Concerns
(Bloomberg) -- A worker rights group that has gone after KKR & Co. and Thomas H. Lee Partners over the treatment of retail employees is now setting its sights on BC Partners’s PetSmart Inc. chain.
In a report sent to public investment firms this week, the group, United for Respect, asked for help securing hazard pay as well as better safety protocols, paid time off and severance benefits and a larger vaccination incentive for employees. It accused the pet supplies retailer of providing inadequate training, staffing and personal protective equipment, conditions that led to hospitalizations and deaths of pets and excessive Covid exposure for workers.
“We all love animals and that’s why we work at PetSmart,” Adrian Valdes, a bather and stylist apprentice at PetSmart in Savannah, Georgia, said in an interview. “But we’re not adequately trained for safety, and we’re so understaffed we’re doing three jobs at a time instead of one.”
A representative for BC Partners said in a statement that PetSmart has paid nearly $150 million in additional compensation for front-line workers, spent millions of dollars on personal protective equipment and is giving $100 to fully vaccinated employees to help cover expenses like transportation or childcare while getting the shot.
Pension Push
United for Respect’s strategy is a calculation that pension, retirement and other public funds, which contribute billions to private equity annually, are the most effective path to influence over an industry otherwise largely impervious to outside appeals. The group held meetings about its safety with the Colorado Public Employees’ Retirement Association and the California State Teachers’ Retirement System.
Representatives for CalSTRS and CoPERA declined to comment.
PetSmart employees say they grappled with unsafe conditions throughout the pandemic, including shortages of personal protective equipment and no paid sick leave. The group also cited a 2018 report by NJ.com that found a growing number of dog illnesses and deaths after the animals received services like grooming and boarding from the chain, and said additional deaths have occurred since.
United for Respect’s previous advocacy helped workers at bankrupt Toys “R” Us negotiate a $20 million hardship fund with the toy store’s sponsors KKR and Bain Capital when liquidation left them without severance. Art Van Furniture’s private equity owner T.H. Lee doubled its hardship fund after employees demanded a bigger payout following chain’s sudden shutdown last year.
The PetSmart campaign is United for Respect’s first effort involving current workers at a solvent private-equity owned firm, Corporate Accountability Director Bianca Agustin said in an interview. The group reached out to PetSmart workers last year after noticing an increase in complaints from unhappy staff. The group and workers contacted organizations and sent a petition from more than 500 current and former workers to BC Partners last year.
Initial outreach garnered no response, until the group sent a letter in July highlighting pet safety concerns, after which Agustin met with the California and Colorado funds.
Sole Supervisor
Catherine Turcyn quit her job as a trainer and assistant manager at a PetSmart in Georgia after three years, saying conditions worsened during her time at the company, particularly during 2020’s pandemic pet boom. Despite increased customer demand, her store didn’t add staff to meet the need, sometimes leaving a single overnight supervisor for 80 to 100 boarding dogs.
The staffing crunch resulted in medicine mix-ups, including an instance where one dog mistakenly received another’s anti-seizure medication. One pup had to be sent to an emergency vet to get its stomach pumped, while the other had a seizure.
Turcyn said changes like adding front-line workers to the company’s board could help the stores run more safely and effectively.
“A lot of the rules they have don’t work in every store,” Turcyn said. “It really comes down to just listening to your employees.”
Private equity firms led by BC Partners bought the chain in 2015 an $8.7 billion deal, and later added debt to the PetSmart when it acquired online pet store Chewy. Despite a rocky period that saw the buyout debt fall to distressed levels, the companies rebounded amid growing spending on pets and pet care. BC Partners later split PetSmart’s operations from Chewy’s and sold shares after the online retailer went public.
Recent trading levels of PetSmart’s debt suggest credit investors are nonplussed by the workers’ concerns. The company’s 7.75% bonds due 2029 are trading at more than 109 cents on the dollar, and its 4.75% 2028 notes last changed hands at 103.125 cents.
Jim Baker, executive director of advocacy group the Private Equity Stakeholder Project, estimated that the owners have received billions in cash and stock dividends since acquiring the company.
“There’s a dramatic difference between how little support workers have gotten compared to the vast amounts of money that BC Partners has taken out of PetSmart,” he said.
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