Lowe’s will open mini Petco outlets inside some shops

Lowe’s is opening petco stores in some of its stores as part of a pilot program. The first is scheduled to open in Texas in February.

Source: Petco

lowes will soon be testing a new offer: A Petco Shop the stores where customers can buy dog ​​food and kitty litter, and even visit a vet while shopping for paint and other materials for home projects.

The two retailers announced a deal Thursday to test the store-in-store locations. The first will open near San Antonio in early February, with 14 additional locations planned in Texas, North Carolina, and South Carolina by the end of March.

The companies declined to share financial terms or the length of the deal.

Lowe’s and Petco have been beneficiaries of the pandemic as Americans took on do-it-yourself projects and adopted pets while spending more time at home. However, retailers could face a more challenging backdrop in the coming months if consumers feel pressured by rising inflation or decide to spend a larger chunk of budget on vacations and nights out rather than pet supplies and home projects.

Lowe’s has been looking at new product categories to keep sales growing while benefiting from a strong real estate market. It added more home decor to its website and stores. It started an initiative to sell and install items that enable seniors to grow old in their own four walls. And it began piloting fitness equipment like treadmills, rowers, and free weights in about 20 of its stores. It already carries some pet-related items, like dog beds and pet-safe rugs.

For Petco, the curated version of its stores is a way to engage more shoppers and potentially get them to visit its larger stores and website as it competes with online players such as Tough.

Nick Konat, Petco’s chief merchandising officer, said he expects the stores will particularly appeal to DIY-savvy millennials. During the pandemic, many of these 20- and 30-year-olds have been leaders “Nesting” trendswhen they bought houses or moved to bigger towns, adopted cats or dogs — and in some cases treated pets as a “trial run” before having children, he said.

“They are high-spending customers and they really care about their pet like family,” he said. “And they’ve done the same to their homes, with many of them being new homeowners or new renters.”

Each shop will feature Petco’s cat and dog logo and merchandise, including some of its exclusive brands such as food brand WholeHearted and fashion brand Youly, as well as national brands. It will feature more than 700 items that customers can buy online and pick up in store if they live near a Lowe’s store that is part of the pilot. Some stores also offer services from visiting veterinarians and pet professionals, including vaccinations, microchipping, prescription pest prevention, and mobile grooming.

The store-in-store will vary in size, but the first location will be about 1,000 square feet and will be in front of the store, said Bill Boltz, Lowe’s executive vice president of merchandising.

The stores will be staffed by a Petco employee, in addition to those at Lowe’s, Konat said.

Other retailers have similar partnerships. aim made a deal with Ultimate beauty to opens curated stores in hundreds of its big box stores — and has similar shop-in-shops Apple and Disney at selected locations. cabbage signed a contract with Sephora to have its beauty salons in stores. Kroger will wear something bed bath beyond Goods in selected stores and Macy’s is Toys R Us stores open.

As of Wednesday’s close, shares of Lowe and Petco are both down about 12% this year. Lowe’s and Petco shares closed Wednesday at $228.10 and $17.43, respectively. Lowe’s shares are up nearly 31% over the past 12 months, giving it a market cap of $153.68 billion. Petco’s shares are down about 37% over the past 12 months, giving it a market value of $5.27 billion.

Petco shares surge almost 70% because it returns to public market

Signage of Petco Health and Wellness Co. outside the Nasdaq MarketSite during the company’s initial public offering in New York, the United States, on Thursday, January 14, 2021.

Michael Nagle | Bloomberg | Getty Images

Shares of Petco health and wellness They rose more than 60% on their Nasdaq debut Thursday, reflecting Wall Street’s appetite during the Covid pandemic-powered pet boom.

Petco opened at $ 26, 44% above its IPO price, but the shares recently traded at nearly $ 30.

On Wednesday night, the company valued its initial public offering at $ 18 to raise about $ 816.5 million, which was above its expected price target of $ 14-17. It trades under the ticker symbol WOOF. Petco is owned by the Canada Pension Plan Investment Board and private equity firm CVC Capital Partners.

The San Diego-based pet supplies retailer was founded in 1965. It went public in 1994 but was privatized when its owner changed hands. It has around 1,470 stores in the US and Puerto Rico, including more than 100 veterinary clinics.

Petco’s customer base has grown during the pandemic as more Americans adopt new dogs and cats, or get other animals like lizards and hamsters. The demand for pet supplies and accessories has also increased over the years as owners treat their pets as part of the family. That inspired them to spend more on toys and accessories and switch to fresh, organic or fresh food.

As families adopt and care for new pets, they buy supplies from dog beds and crates to leashes. Families who had dogs, cats, fish, or other creatures also tended to spend more as they bought toys or treats to keep their pets and themselves entertained.

But it is also exposed to tougher competition. Online rival ToughShares are up more than 250% over the past year. The company has a subscription-based model that automatically replenishes pet supplies for owners such as dog food or cat litter. Barkbox, a provider of subscription boxes for dog food, announced last month that it would go public through a merger with a SPAC.

In an interview with CNBCs “Squawk on the street“Said CEO Ron Coughlin The company has a competitive advantage over its competitors. He said it is adding veterinary services to more of its stores, which tends to have pet owners buying supplies and groceries while they are there. He said it can use its stores to fulfill online orders. And he said the same day deliveries can beat the competition in terms of speed and price.

Correction: Petco shares are traded on the Nasdaq stock exchange. In an earlier version of this story, the substitution was incorrectly stated.