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Petco CEO on eliminating pet shock collar sales

Yahoo Finance’s Alexis Christoforous and Brian Sozzi speak with Petco CEO, Ron Coughlin about the future of the business, as it makes its shift to become a pet health and wellness company.

Video Transcript

BRIAN SOZZI: Petco announced this morning that it's removing pet shock collars from its stores and online and is providing resources for pet parents to discipline their furry friends in less harmful ways. Joining us now with details is Petco CEO Ron Coughlin. Ron, good to see you again here.

I've been in Pecos stores before. I have never seen these collars. How many stores were they in, and why were they in the stores to begin with?

RON COUGHLIN: Yeah, they were in all of our stores, but when we look at it today, our mission is about improving lives. And when we think about shocking your furry friends, we believe that electricity belongs in microwaves, but not to be used as training. Actually, we don't believe in discipline training. We believe in positive training, and that's a better way.

ALEXIS CHRISTOFOROUS: Ron, I'm wondering if-- I know you-- those shock collars are going away. I don't-- I don't have any idea if you deal with the fencing. You know, some people have those sort of electric fences around their properties to stop their pets from leaving the property. Do you have-- do you know if those are going away as well?

RON COUGHLIN: Yeah, so we have a veterinary advisory council with some of the top vets as well as veterinary behavioralists. And so this is the first step in a multi-stage journey. Actually, it's the second step. First one was getting rid of all foods of artificial ingredients and flavors, and then today the shock collars, where there's just a better way. And it really was triggered by our launching of online training, so now there's nobody in America that can't train their pets positively and appropriately. And so we thought today is the right time to make this move.

BRIAN SOZZI: Ron, it sounds as though you're really looking at your portfolio of products and just removing things that no longer make sense. Are there other items on the chopping block here-- leashes with muzzles, choker collars? What else could be pulled from the shelves?

RON COUGHLIN: Yeah, we've really dedicated ourselves to being a health-and-wellness company, so-- you know, the more important thing, actually, that we're driving next is around affordable vet care. 70% of pets don't get the care they need because of affordability, so we are in the process of doing the fastest build-out of a vet network in history.

And we went from 0 to 100. We just launched our 100th store. We'll be at 140 by January, eventually getting to 800. So that's the most fundamental thing, but as I said, we're constantly looking at our portfolio and making adjustments. The next thing is actually artificials in companion-animal foods, which we needed to work with the vendors to generate that change, and that's happening as we speak.

ALEXIS CHRISTOFOROUS: Talk to us a little bit about the cost of doing all of this. This is pretty aggressive, getting those doctors, those vets, into all of the stores over a course of time. And, you know, sadly when we think about eating healthier, whether it's for humans or pets, sometimes that comes at a premium. So how are you handling the cost, and might we start to see some prices for some of these things go up at Petcos?

RON COUGHLIN: Yep, we pride ourselves on having a variety of choices for different affordability. Two years ago we got rid of our artificial foods, foods that had artificial ingredients and flavors. That was a $100-million bet. And guess what? It restarted our growth, and it elicited the passion from the partners in our stores. This is a $10-million bet, but we believe it's the right way to do things. And what I've said since minute one is what's right for the pet is going to be right for business, and that's held true, and I'm confident its going to hold true with this initiative.

BRIAN SOZZI: Since we last spoke with you, Ron, there were some reports that you are eyeing an IPO. How long or how far-- how long away in that process are you?

RON COUGHLIN: Our partners are doing a great job taking care of more customers in more ways. And when you have success, people talk, but we don't make comments on anything in that area.

ALEXIS CHRISTOFOROUS: And lastly, I mean, in terms of innovation, what can we expect for our pets from Petco in the coming months?

RON COUGHLIN: Like I said, we're rolling out our veterinary network, and along with that, we've just launched something called Vital Care. And Vital Care is really the only holistic solution for a pet parent to ensure they're providing health and wellness for their pets. So whether it is grooming, whether it's your vaccination, whether it's discounts on food, we are the only pet provider that can go into an integrated fashion, provide all those things for a pet parent. And Vital Care allows you to do that in a simple monthly payment. We think it's quite breakthrough.