Ron Coughlin, CEO of Petco Animal Supplies Inc., in front of the Nasdaq MarketSite during the initial public offering (IPO) of Petco Health & Wellness Co. in New York, January 14, 2021.
Michael Nagle | Bloomberg | Getty Images
Petco announced Wednesday that its CEO, Ron Coughlin, is stepping down and that board member and Best Buy executive R. Michael Mohan will take over as interim CEO while the company searches for a permanent replacement.
Coughlin will serve as an advisor to the board to “support the leadership transition.” In a statement, Coughlin said he was proud of the work he has done over the past five years.
“Working with our great partners during a time of tremendous change and growth has been a once-in-a-lifetime opportunity,” said Coughlin. “I am proud of the differentiated business model we have built that delivers the best for pets and positions the company well for the future.”
Mohan has been on the company’s board since March 2021. He previously served as Lead Independent Director, a role he will relinquish upon assuming the interim CEO position. He is also the former chief operating officer and president of Best Buy.
“Mike’s highly successful track record across multiple segments of the retail industry, his extensive knowledge of Petco and his strong operational skills make him the ideal leader to ensure a seamless transition as Petco continues to evolve,” Petco board member Cameron Breitner said in a statement .
Petco also reported fiscal fourth-quarter results Wednesday that were roughly in line with expectations.
Here’s how the pet retailer performed compared to Wall Street’s expectations, based on a survey of analysts by LSEG, formerly known as Refinitiv:
- Earnings per share: 2 cents adjusted versus 2 cents expected
- Revenue: $1.67 billion vs. expected $1.62 billion
The company reported a net loss of $22.6 million, or a loss of 8 cents per share, for the three-month period ended Feb. 3. A year earlier, the company reported net income of $32.7 million, or 12 cents per share. Excluding one-time items, Petco reported earnings per share of 2 cents.
Revenue rose to $1.67 billion, up about 6% from $1.58 billion a year ago.
Petco Health and Wellness Co. signage in front of the Nasdaq MarketSite during the company’s initial public offering (IPO) in New York, U.S., on Thursday, January 14, 2021.
Michael Nagle | Bloomberg | Getty Images
The company’s shares rose as much as 9% in premarket trading Wednesday following the CEO change and earnings release, but closed about 2% lower.
Coughlin’s decision to step down comes as Petco’s market capitalization has declined over the past year, despite the company reporting steady sales and comparable sales growth. As of Tuesday’s close, Petco’s stock is down about 19% year-to-date and its market cap is about $784 million, down from about $3 billion in February 2023.
The pet industry has been under pressure, struggling with a drop in demand after a pandemic-fueled boom stalled. Record numbers of families adopted pets during the Covid pandemic and then needed supplies to support those animals, resulting in huge profits for retailers like Petco and Chewy.
However, new adoption has slowed since then. Last year, Chewy and Petco posted strong sales in stable categories like pet food and medicine, but demand for high-margin items like beds, leashes and toys was sluggish.
Coughlin has played a critical role in transforming Petco into a health and wellness company since taking over as CEO in 2018. Under his leadership, the company stopped selling unhealthy pet food, removed products such as shock collars from its offering, and began expanding its services and veterinary business.
In 2020, the company changed its name to Petco Health and Wellness Co. The following year, Coughlin went public.
Ron Coughlin, CEO of Petco Animal Supplies Inc., right, in front of the Nasdaq MarketSite during the initial public offering (IPO) of Petco Health & Wellness Co. in New York, U.S., on Thursday, January 14, 2021.
Michael Nagle | Bloomberg | Getty Images
Petco has used its extensive local presence to build veterinary clinics. Petco is now one of the largest animal health providers in the country, operating 282 full-service hospitals at the end of last year.
Pet healthcare — and the high margins that come with it — is a crucial part of the overall pet market and has driven spending growth in the U.S., according to Bloomberg Intelligence. While revenue from Petco’s services business rose 17% in the quarter, it represents only a small portion of the company’s total revenue. Returns on these investments have taken time, and Wall Street appears to have grown impatient with Petco’s performance.
“I look forward to working with the leadership team and our partners to further strengthen our business and increase profitability through operational discipline and execution that improves growth, expands margins and generates cash to create shareholder value,” Mohan said in a statement. “My focus will be on our people, our operations and our customer experience, working together to advance our strategy.”
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2024-03-14 09:38:32
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