Although many pet retailers exceeded the growth and earning department expectations, their stocks are not growing. This is due to the fact that Wall Street experts believe increased spending on pets will have to stop soon.
The spending grew with the rise of pet owners during the COVID-19 pandemic. Now, 84.9 million families in the United States own at least one pet. And although there is no fall in sales, stock experts are not convinced.
For example, Petco published a report for Q3 of 2020, which stated that their net sales were up by 15%, while their adjusted earnings were up by 17%. Their stocks plummeted by 13% the same day.
Also, the needs of puppies are not the same as the needs of older dogs. Owners who bought/adopted puppies during the pandemic first had to buy a variety of essential products, like dog beds, houses, and similar.
Now they’re mainly buying pet food. But, although they’re looking for pet food of the best quality, the gross margins are not quite the same.
The retailers like Petco and Chewy are fighting for survival and market dominance by focusing more on the veterinary and health segments. For now, these services and premium food sales keep the growth and high earnings in pet retail.
However, we’re yet to see if it will stay strong or if Wall Street predictions will come true.