PetSmart Q1 2011

PetSmart Inc (PETM) reported strong first quarter 2011 results, booking net income of $71 million on $1.5 billion in revenues, with earnings up 33%. The company reported comparable store sales growth of 5%, services sales growth of 9%, and total sales up 6.8%.

Super premium pet food and services seem to be primary drivers of the customer to the store. The company believes it has captured 15% of the $3.6 billion annual market for grooming and boarding services. Further, the company notes strong sales in grooming supplies, and points to exclusive Martha Stewart and GNC branded product launches.

PetSmart has recently matured efforts to drive the customer into cross-selling and defined channel strategies, as well as adding higher margin private label brands into the mix. A good combination in the highly competitive pet industry.

Source: PetSmart Investor Relations

Pet Industry 2011 Strategic Outlook

A new market research report for pet industry business development is available for purchase online.

U.S. consumer spending continued to grow across all four segments of the pet industry, cementing its reputation as "recession resistant." But shifting demographics reveal changing patterns by core demographic groups. U.S. pet owner spending by age, income, higher income, household composition, and region are charted, with an Executive Summary by Dillon Media.

The Pet Industry 2011 Strategic Outlook analyzes nationwide spending, trends and business involvement in the industry, including how it fared during the recession and opportunities moving forward. The data aggregate consumer spending on all pets in four main segments: Pet Food, Veterinary Services, Pet Purchase Supplies & OTC Meds, and Pet Services.

The latest available data are from 2009, with forecasts through 2015. This report is valuable to participants in the nationwide pet retail market, for business plan citations, for product development strategy, for marketing and advertising plans, and for an overview of the pet industry landscape.
 

Pet Owner Spending Trends in the U.S.

A new report has just been published on nationwide pet owner spending trends.

The aging population, childless consumers and the ascendancy of high-income baby boomers are analyzed by their pet spending habits. Charts and tables are included using data from the Department of Labor, Bureau of Labor Statistics that highlight core trends in U.S. consumer spending by income, age, general region, and family composition.

The Pet Industry 2008 Strategic Outlook is our annual report, written for businesses marketing to pet owners.
 

Petco Expands Services Offerings

Petco announced a partnership with Sittercity.com today, adding in-home pet sitting services to its lineup. While PetSmart (NASDAQ:PETM) focuses on bringing the customer to the store for daycare and PetsHotels, where they subsequently load up on high-margin tennis balls and the like, Petco is going in the other direction, extending its reach directly into the consumer's home. Here's the press release.


Photo: PR Newswire Photo Service/Sittercity.com

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Marketing Pet Services?
The Pet Industry 2008 Strategic Outlook is an affordable market research report on current and emerging trends and demographics for pet businesses.

Kidney Treatment Centers for Pets

The Washington Post reports on the differences between acute and chronic kidney failure, concluding "if your pet ate any of the tainted foods recalled by Menu Foods and is not showing symptoms, that does not necessarily mean your pet is safe."

Newsweek offers an interview with an expert with an interesting perspective on issues about pet food safety and feeding dogs and cats in general.

As noted in an earlier post, the UC Veterinary Medical Center-San Diego's unit for treating acute and chronic kidney failure is one of only two veterinary clinics in California and five in the nation equipped to provide dialysis for cats and dogs.

Another source of advanced veterinary care is the University of Pennsylvania, School of Veterinary Medicine feline renal transplantation program. A cat kidney transplant costs $8,000.
 

Pet Franchises

Franchising.com writes about some popular pet franchisees, including pet services like daycare, grooming and training. Check it out here. But if you're interested in buying a pet business or franchise, don't forget to research the entire industry first with independent market research.

Pet Industry News

PetSmart, Inc., the nations largest retailer of pet supplies, announced 2006 fiscal year results. Net sales in 2006 grew 11% from the previous year, to $4.23 billion. Pet services sales and revenue continue quarterly growth above 20%, generating $376 million in revenue in 2006.

The company will close all 180 State Line Tack departments, exiting the equine business to make room for higher margin pet supplies or PetsHotels.

Earlier this month, PetSmart increased its number of stores in Canada by 58% to 42 with the acquisition of 19 Super Pet stores.

One current advertising campaign directs users to the Nutrition Selector on the website, featuring highly differentiated premium dog and cat foods. Pet food is the largest segment of the industry - American's spend about $14 billion each year on pet food - and a primary driver of the consumer into the store.

Petco, the nation's second largest pet specialty retailer, went private last year but refuses to sit, expanding on services and pampering themes. The company announced a nationwide fashion show marketing campaign, and was reported to be exploring the mobile grooming business in Las Vegas.

Central Garden & Pet, the largest supplier of pet items to PetSmart, Petco, Wal-Mart, Target and many others, has been impacted recently by rising grain prices and Wal-Mart's decision to stop selling live fish. But it continues to innovate and grow across many segments of the industry, winning nine New Product awards at the 2007 Global Pet Expo.

Nestle, the world's largest food company, will open its first pet food factory in China this year as it tries to take a bite out of Mars Inc's Chinese market share. Mars has been in China for 10 years, and sells a lot of Pedigree and Whiskas to the local market through an alliance with a Chinese company, in this case Effem Foods (Beijing) Co. Ltd. Nestle may benefit from newer foreign ownership regulations.

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VCA Antech Gets an Optimistic Diagnosis

What better way to celebrate a twentieth anniversary than by watching the share price hit an all-time high? VCA Antech, Inc. (Nasdaq:WOOF) did just that, beating 2006 estimates and providing upbeat 2007 guidance, citing increases in just about everything from margins to revenues to average order size.

The company bought it's first animal hospital in 1986, and now owns 379 veterinary hospitals in 37 states, operates 33 laboratories that serve all 50 states, has about 10,000 employees and over a billion dollars in annual revenue.

Actively consolidating the veterinary channel, VCA Antech noted in its 4Q and Full Year 2006 conference call very strong growth in digital radiography (high-resolution digital x-ray images) equipment. Recent market penetration has established the company as a leader in this growing area.

Management attributes the company's 2006 growth to "the great market that we're in" and to the core execution of business processes and strategic plans

Source: VCA Antech
Video: WOOF Report

Marketing Veterinary Services?
Check out the Pet Industry Strategic Outlook by Dillon Media.
 

PetSmart 3Q results highlight services growth

PetSmart Inc., the nations largest pet specialty retailer, posted higher earnings in its third quarter 2006 results. Net income grew1.9% to $31.7 million on net sales of $1.0 billion, up 14% from the same period in 2005.

Comparable store sales grew 6.8% in the quarter, compared to 2.4% during last year's third quarter. Pet services sales were up 25.4% to $89.7 million.

Source: petsmart.com

In earlier conference calls, CEO Phil Francis has said services customers on average spend more money and return to the store more often than others, and that dog grooming is the primary driver of the services-oriented pet parent into the store.

Pet services spending has grown consistently over the last decade. These days, both the busy professional and the empty nester happily spend record amounts of money on dog grooming, boarding and training.

And the aging demographic of American househoulds should continue to drive this trend in the future. Click on the chart to enlarge.

Not in the Pet Industry? Maybe You Are

The independent product evaluators at Consumer Reports magazine seem to be paying more attention to pets these days. Besides reporting on dog and cat products and services recently, including airline policies for pet travel, they are beginning to address the impact of a dog or cat on household products they test.

The October 2006 rating of vacuum cleaners includes a sidebar explaining how they are adjusting methodology to allow for pets, most notably they collected six months worth of cat hair and mashed it into a rug. The surprise is how poorly some top-rated vacuum cleaners performed.

Just another reminder that a large percent of almost everyone's target market owns pets.

Source: www.consumerreports.org

Dog Grooming Laws

The Wall Street Journal reported last week on the changing nature of the pet services industry. High demand and more competition for dog grooming has increased deaths and injuries in a lightly-regulated environment, so animal welfare groups and lawmakers are pushing for changes ("Deadly Incidents Prompt Concern About Pet Salons," by Sara Schaefer Muñoz, The Wall Street Journal, Aug. 2, 2006). Laws being considered in New York and Pennsylvania would require training and licensing for groomers.

Pets are considered property by the legislative system for the most part. Even though animal welfare laws continue to evolve, mirroring the humanization trend, as a piece of property, a dog is not much different than an appliance when it comes to damage and loss. According to the Wall Street Journal, many attorneys refuse to take on cases involving pets, and those who do, and win, often get just above the market value of the pet.

Marketing Pet Services?
New research from Dillon Media shows demographic info by age, income and more, for consumer spending on pet services in the U.S. Includes a current pet industry overview.
 

PetMed Express

PetMed Express continues to increase the dosage. As the largest pharmacy for dogs, cats and horses, PetMed is well positioned in the prescription and non-prescription pet health segments.

PetMed won the 27th spot on BusinessWeek's list of the top 100 Hot Growth companies. By focusing on their best-selling products and their relationship with vets, PetMed grabbed 1.3 million customers in the past two years, each spending about $76 ('Hot Growth: 100 Sizzling Companies to Watch,' by Arlene Weintraub, BusinessWeek, June 5 2006).

And Standard & Poor's on June 5 announced that PetMed Express, Inc. (NASDAQ:PETS) will be added to the S&P SmallCap 600 GICS (Global Industry Classification Standard) Catalog Retail Sub-Industry Index on Monday, June 12.

Besides the natural alignment with pet health trends, I think PetMed is also decently positioned against high gas prices simply because of its online business model.

Marketing Pet Health Products or Services?
A new report is out, with trends and demographics by age, income, region and family size, called 'Consumer Spending on Veterinary Services 2000-2004.' Check it out.

Pet Care in the 21st Century

Advances in veterinary medicine, new screening and treatment options, and consumers more educated than ever about pet diseases continue to drive the market for pet health care products and services.

Dog and cat owners in San Diego, California now have access to top-quality care at the new clinical facilities for the UC Veterinary Medical Center-San Diego.

The unit for treating acute and chronic kidney failure is one of only two veterinary clinics in California and five in the nation equipped to provide dialysis for cats and dogs. Other services includes behavioral, pharmaceutical, and nutritional specialty care.

The center was established in 1998 by UC Davis and UC San Diego to collaborate on teaching and research and to promote emerging specialty services in Southern California.

Related links:
UC Davis School of Veterinary Medicine
Marketing veterinary services? - Charts of vet spending by age, income and family makeup. Purchase online.
Pet Health Reference Search - A customized search engine for symptoms, conditions and treatments.

40 Percent of US Households Own a Dog

The pet industry recovered nicely from a slight slowdown last fall and winter, and continues to exhibit strong and resilient growth patterns.

The overall industry reached $36.3 billion in the U.S. in 2005, according to the APPMA, up 5.5 percent from 2004, and up 27 percent since 2001.

Segments in 2005 that beat earlier estimates include food ($14.7 billion), veterinary care ($8.7 billion), and services like grooming and boarding ($2.5 billion).

The APPMA estimates that 63 percent of households own a pet of some sort, and that 39.2 percent of American households own 74 million dogs.

Market Research Report:
Check out the Pet Industry Strategic Outlook by Dillon Media.

Pet Business Opportunities in Los Angeles

An article in the Washington Post about a $10 billion facelift for downtown Los Angeles mentions some interesting statistics suggesting potential opportunities for pet industry franchises and businesses:

There are more pets than children living in downtown Los Angeles.

There is a shortage of retailers and services for that area.

Residential units are forecast to grow 300% in the next 4 years.

Major development of retail, hotel and commercial space is planned.

Read the full article here.

Looking toward 2006

The large pet specialty retailers took a hit in consumer traffic this summer due to a shift in consumer shopping behavior. High gas prices forced people to consolidate trips around a central shopping destination like the grocery store or home supplies store, resulting in fewer trips to PetSmart, Inc. (NASDAQ:PETM) and Petco Animal Supplies, Inc. (NASDAQ:PETC) and fewer purchases of high margin goods.

No kidding. Over the summer I found a coupon in the mail to visit the new PetSmart across town. It was for $3 off a large sack of premium food. Considering it would cost nearly that much in gasoline to drive there ($3.17 a gallon at the time), this hardly seemed worth an extra trip.

But pet services proved resilient to these changes, growing at over 20% all year. Petco announced in its 3rd Quarter conference call on Nov 22 that services customers also return to the store more often, and spend more per trip, than the average customer. Grooming is the major driver of this trend, according to Bruce Hall, president and COO of Petco.

The industry remains healthy and I believe will see 2005 overall growth above 4 percent. Central Garden and Pet Co. (NASDAQ:CENT), a major creator and supplier of pet supplies, forecasts net sales growth of 5-6 percent for 2006. While Petco and PetSmart's stock prices have declined over the last year, significant gains were seen in health-related pet companies like PetMed Express, Inc. (NASDAQ:PETS), VCA Antech, Inc. (NASDAQ:WOOF) and MWI Veterinary Supply, Inc. (NASDAQ:MWIV) during 2005.

Segments like premium food and health care saw a huge boost in consumer awareness and acceptance in 2005 due to mass-marketing and are poised to continue strong growth next year in a more competitive environment.

For businesses selling pet products and services, check out The Pet Industry Strategic Outlook Report by Dillon Media LLC.
 

Pet Insurance 2006

The market for pet insurance continues to exhibit strong growth and shows no signs of letting up in 2006, with both consumers and corporations buying more policies than ever before. The Wall Street Journal reports that pet insurance is currently offered by 5% of companies, up from 1% in 2000, and that Google (NASDAQ:GOOG), Hilton Hotels (NYSE:HLT) and Mercedes-Benz USA (a wholly-owned subsidiary of DaimlerChrysler North American Holding Corporation) plan to offer it as an employee benefit in 2006. The newspaper also reports on the fees submitted to VPI, the largest pet insurance provider in the U.S., for the most frequent claims. For dogs, the number one claim is for soft-tissue trauma costing an average of $88 each ("More Employers Are Offering Pet-Insurance Benefits," by Kerry Hannon, The Wall Street Journal, Nov. 12-13, 2005).

I think the primary driver of this segment is still the trend of humanizing pets, not only for insurance but for medications, veterinary care, pet health products and clinical trials. Treating pets just like their own children, pet owners are increasingly willing to spend large amounts of money on medical care.

The potential impact of the trend of humanizing pets may change the pet insurance industry in 2006. Pet industry followers currently cite the lack of lawsuits in the pet insurance industry as another factor in its growth, but assuming pet industry trends will once again mirror human trends implies a potential increase in lawsuits against veterinarians and pet insurance companies.

Marketing Vet or Health Services?
Market research explores health trends and consumer spending in the pet industry. Ideal for marketing, advertising and product development.

Related Links
Pet Health Reference Search
Pet Care in the 21st Century
 

MWI Veterinary Supply Q4 and 2005 Results

With solid numbers for the fourth quarter and 2005 year, wholesale distributor MWI Veterinary Supply, Inc. is rapidly establishing itself in the pet health market. Net income for the quarter rose 112 percent compared to last year, while net income for the full year rose 80.5 percent to $4.6 million.

According to President and CEO Jim Cleary, vet supplies sales have resisted the changes in consumer spending behavior seen by other retailers in the wake of higher energy prices. Like the pet services market, which retained strong growth rates relative to pet supplies over the summer, it seems to me one more indication that pet owners are unwilling to compromise on the health, wellbeing and appearance of their pets.

Along with increased market penetration, the growth of its companion animal business is positively impacting the company. Citing growth rates "above market" for both companion animal and production (eg. cattle) lines, Jim Cleary noted that the fourth quarter saw the companion animal business grow at a "significantly higher" rate than the production business. These higher margin products boosted the bottom line.

The company shows signs of moving up the value chain. With strategic plans for distribution logistics, customer service and value-added services, 2006 will also bring an expansion into private label products. With three current private label products at "relatively low" sales levels, the company mentioned several additional products are in the pipeline for 2006.

I believe the company is also riding two strong trends within the pet industry, namely pet insurance and medications. Only last year, pet insurance underwent a fundamental shift, from being marketed traditionally through veterinarians to being mass-marketed by retailers like Petco. Similarly, pet medications are produced by some of the largest pharmaceutical companies in the world that spend significant amounts of money on this segment.

Related Links:
Consumer Spending on Vet Services - purchase charts of pet owner spending trends by age, income, family size, and more.

Related Posts:
MWI Vet IPO
Dog Flu Info

Honda Introduces Pet Friendly Cars

The Wall Street Journal reported this morning that Honda Motor Co. will unveil a minivan designed for dog owners later this month at the 2005 Tokyo Motor Show. [Update: Honda Dog Website Launched]

The concept car, currently being tested for consumer reaction, includes amenities like a built in dog dashboard carrier, washable seats, a third seat row that reconfigures into a holding pen for larger dogs, and tire treads shaped like paw prints.

Honda will also introduce the "Travel Dog" line of car accessories in Japan, including a $440 "pet cargo cover" that pulls out into a dog bed, according to the newspaper.

Source: "Honda Caters to Japan's Pet Population Boom," by Jathon Sapsford, The Wall Street Journal, Oct. 5, 2005

Related Posts:
Aug 17, 2007 Dog Friendly Car Reviews by DogCars.com
 

MWI Veterinary Supply

A vet supply company goes public. Although MWI Veterinary Supply, Inc. has been around for over a decade, it was acquired in 2002 by a private equity firm that apparently had its eyes on the pet industry.

Distributors to 14,000 vets of 10,000 products from 350 vendors, MWI Veterinary Supply consolidates a large number of products in a strong growth sector of the still fragmented pet industry. Serving the production animal line (cattle, for example) as well as companion animals, MWI is seeing approximately equal growth in both.

The company said third-quarter profit rose to $1.4 million, or 24 cents a share, from $71 million, or 12 cents a share, in the same quarter last year. Revenue for the quarter rose 30 percent to $138 million.

President and CEO Jim Cleary noted that eCommerce sales as a percent of total sales was 20.7 percent compared to 17.4 percent in the same quarter last year.

This company reminds me of Central Garden and Pet a number of years ago, as it transformed from a distributor to a major producer of pet products by acquiring the best of its suppliers. MWI Vet finds itself in a good position to follow that strategy, and shows signs that it will. Having acquired Vetpo Distributors in January 2005, the company has produced $8.7 million in sales from the transferred sales reps since then, and mentioned in the earnings conference call it will pursue more strategic acquisitions.