Taking Advantage of Opportunities for Growth in the Pet Retail Space: Consumers Want Convenience and High Quality When Choosing Where to Buy Pet Food

Wall Street Transcript

67 WALL STREET, New York - July 11, 2013 - The Wall Street Transcript has just published its Pet and Animal Care Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs and Equity Analysts. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Improving Pet Acquisitions - Heightened Competition Among Medication Providers - Resiliency To Discretionary Spending Trends - Competition From Big-Box Retailers

Companies include: Petsmart Inc. (PETM), Wal-Mart Stores Inc. (WMT), Target Corp. (TGT), Walt Disney Co. (DIS) and many more.

In the following excerpt from the Pet and Animal Care Report, an expert analyst discusses the outlook for the sector for investors:

TWST: PetSmart has a few different business segments, such as supplies, live pets, grooming and training, and boarding and veterinary care. In which of those business segments do you see the best potential for growth, and do you think PetSmart is positioning itself properly to take advantage of opportunities for growth?

Mr. Binder: PetSmart management would probably argue that the total store is really about a solution for pet. That super-premium dog and cat food area has been a growth area and continues to be. With the humanization of pets, they have enjoyed double-digit growth in that area, and they expect it to continue at that pace. It's now the largest part of their food offering.

Grooming is an important growth area for them. But I don't know that I would call PetsHotel a growth area. I think they are growing, but it's not necessarily as big a focus as trying to grow the core supplies area.

Albeit a small part of the business today, the online channel is high-growth. They outpaced the industry growth rate in Q4, which they estimated at about 14%. It is an area that's growing faster than the total company from a rate perspective, but again still fairly small dollars. The economics for online sales are not as favorable as in-store, but PetSmart is still profitable.

Management claims the consumer isn't really pushing them in that direction yet, but as we have seen with other business, it may just be a matter of time. Arguably, they need to adapt, but online growth is not necessarily the best type of growth for these guys, using the current model.

TWST: How important is the pet supply business to big-box stores like Target and Wal-Mart? Have you seen them exhibit any notable innovation with regard to capturing market share from specialty realtors like PetSmart?

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

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