In 2022, Petco once again demonstrated our ability to deliver Purpose Driven Performance, achieving our 17th consecutive quarter of comparable sales growth.
We continued to support pet parents with our one-of-a-kind health and wellness ecosystem, helping them provide exceptional care at every stage of their pet’s life through differentiated food, merchandise, and services. As we lean into our long-term 360-degree care strategy, we are positioning ourselves to pull away from the pack by best leveraging the macro trends of humanization and premiumization.
In a resilient category that continues to grow through economic cycles, this year Petco delivered comparable sales growth of 5%, revenue growth of 4%, and our 16th consecutive quarter of customer growth, adding a million new customers in the year.
These results speak to our ability to execute against a clear long-term strategy while remaining agile to changing environments. And we’ve done so because Petco has some of the most incredible people in retail, all contributing their knowledge, passion, and ideas to taking care of our customers and shaping Petco’s future as a leader in pet health and wellness.
The scaling of our services, including veterinary, grooming, and training, continued to be a growth driver for Petco. For our veterinary services in particular, between our full-service veterinary hospitals and Vetco clinics, we now have a veterinary presence at 90% of our locations. With 247 full-service hospitals and a total of almost 58,000 Vetco clinics run in 2022, we were able to provide lifesaving prevention, diagnosis, and treatment for millions of pets.
The triumvirate of record veterinarian hires and strong retention, enhancements in online booking, and innovation in medical technology significantly boosted transaction volume, translating into double-digit comparable sales growth in our veterinary business for the full year.
Our veterinarians love working at Petco. More importantly, because of their passion, our industry partnerships, training programs, and advances in medicine, including AI radiology diagnostics and handheld ultrasound, we are redefining what a veterinary network looks like.
When it comes to merchandise, we continue to differentiate with a unique assortment of products, the majority of which can’t be found in mass or grocery channels, especially as pet parents continue to lean in to premiumization and humanization.
The addition of leading brands including Stella & Chewy’s, Backcountry, and Yummers, as well as expansions with JustFoodForDogs, not only continue to drive sales but also draw in new pet parents. Moreover, our owned brand assortment resonates powerfully with customers, both in the premium and value-orientated spaces.
Our owned brands including WholeHearted, Reddy, Youly, Leaps & Bounds, and EveryYay are perhaps the clearest example of how our health and wellness focus blends with our creativity and innovation to provide a differentiated merchandise offering for pet families.
Petco’s footprint also continues to expand. Our number one Mexico business continues to strengthen, expanding our position in this expanding market. And we launched our rural store test pilot, connecting Petco to local communities and capturing share of this rapidly growing market with a differentiated multi-pet specialty offering unmet by competitors.
And through new strategic partnerships with Lowe’s, Canadian Tire, Nationwide Insurance, and Marriott, we’re creating synergies with combined customer bases, furthering our reach and supporting humanization trends around pets and their wellbeing.
Differentiated GrowthWhen it comes to growing our customer base through data and memberships, 2022 saw us simplify and unify all our memberships under the “Vital Care” program.
As of today, we have over half a million members in our paid-for “Vital Care Premier” program, and 24 million “Vital Care Core” members, cementing Vital Care as a convenient, accessible, and affordable tool for customers as they navigate pet parenting.
In addition to providing tailored benefits, savings, and advice to pet parents, Vital Care drives loyalty and brings them further into our ecosystem. Premier members have a 3.6x higher lifetime value than non-members. Members visit more and see a lift in spend across all categories – including supplies, consumables, and services.
Vital Care is the embodiment of how Petco provides the full complement of pet care that no one can replicate. We’ll continue to innovate the program with an enduring focus on growing, engaging, and retaining our health-conscious customer base.
Our Petco partners are, without doubt, our heroes. As a company, we have committed that as Petco does better, our partners do better, and we have expanded our benefits and policies to help our people thrive.
We are happy to acknowledge and reward our partners for their passion and dedication. This has included performance bonuses to recognize incredible work, keeping benefit premiums flat for four consecutive years while also evolving them to fit their lives – including parental leave, fertility, and adoption coverage – and raising our base hourly wage to ensure every non-trainee partner makes at least $15 per hour.
Petco is not only an enjoyable place to work, but it’s also a place to grow. We continue to evolve our training programs to provide our partners with the skills they need to provide the best care and support for pets and pet parents, and grow in their careers.
2022 saw our first in-person Leadership Summit in three years, gathering our pet care center, veterinary, and field leadership together to collaborate and inspire each other. It was the perfect opportunity to remind ourselves that the transformations Petco has made in the last few years have all been driven by our Petco partners. We also celebrated our top performing partners at our 2022 Epic Achiever event in San Diego.
In particular, I’m most proud of the more than 200 pet care center partners now enrolled in our Registered Vet Tech program. In collaboration with Penn Foster, we’re helping partners become veterinary professionals where the costs might have been a barrier, as well as building home grown talent for our rapidly growing vet business.
Overall, the impact has been significant, with 2022 seeing increased applications and improved overall retention year-over-year among our pet care center partners, and increased diversity in new hires across our pet care centers, support centers, and distribution centers.
I love connecting with our partners during visits to our pet care, distribution, and support centers as they consistently inspire and challenge us. A sense of community is the glue that binds the business together. Whether it’s through efforts from our seven partner resource groups, or the consistent collaboration between our teams, we continue to make Petco an appealing and purposeful place to work.
As we think about the full year, I’m immensely proud of the positive impact Petco continues to make on the world around us by taking care of pets, people, and preserving our planet both now and for years to come.
In sustainability and responsibility, we continued the progress made over the last three years. Petco was ranked in the top 12% in the retail industry in the S&P Global CSA (Dow Jones Sustainability Index Assessment) as of December 2022 – our first time ranking on this index. This year our efforts on ESG initiatives resulted in year-over-year improvements across all of Petco’s priority ESG ratings.
Specifically, we convened a sustainability task force to support and catalyze sustainability efforts across the organization – including energy, water, and plastic reduction. We made meaningful progress against our sustainability efforts – including programs with our local communities and suppliers – and developed an environmental dashboard to gauge progress on a quarterly basis.
Through our partnership with Petco Love, we’ve helped save nearly 7 million pet lives to date. And through its Vaccinated and Loved initiative, Petco Love reached its goal of distributing over one million free vaccines to pets in under-resourced communities, giving all pets the best chance to live long and healthy lives.
Since that milestone, Petco Love has distributed an additional 430,000 free pet vaccines to its partners, bringing the total number of free pet vaccines distributed as part of its Vaccinated and Loved initiative to more than 1.4 million to date.
As part of Petco Love’s Love Lost program more than 17,000 pets were reunited with their loving families – leveraging a searchable database of over 100,000 pets in 2,000 shelters and using innovative facial recognition technology.
Both these initiatives are just a small part of the incredible work Petco Love does with shelters and foster organizations across the country, making meaningful impacts to pet and pet parent lives every day.
And speaking personally, I’m grateful for Petco Love and Priceless Pet Rescue for helping me find the newest member of the Coughlin family and Petco’s new Chief Dog Officer, our sweet chocolate lab Yogi.
Additionally, I’m proud we also established the Yummy Memorial Pet Cancer Fund, a financial resource to our partners to cover the costly treatment of pet cancer.
Pet cancer is one of the biggest threats to a pet’s life, and unfortunately, many pet families can’t afford treatment. We’re proud that in partnership with Blue Buffalo we can help our partners have many more happy and healthy years with their beloved family pets.
After almost five years as CEO, I remain in awe of how far we’ve come on our health and wellness transformation.
Petco’s future continues to be bright. I’m confident that we are heading into 2023 with a resilient category, a strong operational foundation, and the innovation capabilities to meet the changing needs of pet parents and take the very best care of our partners.
I want to extend my appreciation for the contributions our 29,000 partners make every single day, and my thanks to everyone who continues to support Petco on its purpose-driven growth path.
1 Non-GAAP financial measure; please refer to the section titled
“Reconciliation of Non-GAAP Financial Measures to GAAP Measures” beginning
on page 52 of the company’s Annual Report on Form 10-K for the fiscal year
ended January 28, 2023 for definitions and reconciliations of Non-GAAP to
GAAP financial metrics, including an explanation of updates that the company
has made to its calculations of certain Non-GAAP financial measures.
Information about the forward-looking statements in this
letter can be
found here.