Petco Leaps in Trading Debut After IPO Raises $864 Million

Petco Health and Wellness Co. jumped 63% in the animal supply chain store’s return to the market after raising $864 million in an initial public offering.

Shares of Petco closed at $29.40 Thursday in New York trading, giving the San Diego-based company a market value of about $6.4 billion. Petco sold 48 million shares for $18 each on Wednesday after marketing them for $14 to $17.

Petco will continue to be controlled by its largest investors, including private equity firm CVC Capital Partners and Canada Pension Plan Investment Board. They acquired Petco for $4.6 billion from TPG and Leonard Green in 2016, a decade after those two firms took Petco private.

The pet-oriented retailer has grappled with challenges including rising competition, while also successfully navigating the coronavirus pandemic.

Petco’s growth accelerated through the pandemic, Chief Executive Officer Ron Coughlin said in an interview. The company started same-day delivery five weeks ago and 80% of online orders are fulfilled by its stores, he said.

Sales Boost

The pandemic also led more people to adopt pets, which will continue to lift Petco’s sales. That goes beyond staples such as kibble and cat litter.

“Millennials are even more likely to treat their pets like human beings,” Coughlin said. “If millennials are wearing a puffer vest, guess what, through our brand their boxer can be wearing a puffer vest at the same time.”

Petco operates about 1,500 stores across the U.S., Puerto Rico and Mexico, according to its filings. Some offer pet care services, veterinary advice and vaccination clinics, and the company also has a digital health service.

Petco had a net loss of $25 million on net sales of $3.58 billion for the 39-week period ended Oct. 31, according to its filings.

Barkbox Deal

Dog products company Barkbox Inc. is going public through a merger with the blank-check company Northern Star Acquisition Corp. The transaction, announced in December, values Barkbox at about $1.6 billion based on enterprise value, according to a statement.

Petco’s IPO was led by Goldman Sachs Group Inc. and Bank of America Corp. The shares are trading on the Nasdaq Global Select Market under the symbol WOOF.

©2021 Bloomberg L.P.

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