: Petco expands PupBox subscription service in continuing effort to address $50 billion pet health market

Petco Health and Wellness Co. is expanding its PupBox subscription service to include dogs of all ages, the company announced Wednesday.


will now offer a PupBox subscription for puppies ages newborn to six months, puppies from seven to 18 months old, dogs from 19 months to six years and senior pups from seven to 11 years old.

The subscription boxes offer items for different stages of a dog’s life, from training guides to treats and educational materials and tips. Boxes also come with promotions for other Petco services and items, including veterinary care and grooming.

PupBox prices range from $29 to $39 per box based on whether a customer has a monthly or annual subscription.

Petco has offered PupBox for the past two years, tripling in size, according to a statement from Chief Executive Ron Coughlin.

Petco reported second-quarter earnings that beat expectations and raised its full-year guidance in August.

Pet adoptions soared during COVID-19, and Coughlin emphasized the importance of pet health during the earnings call and in comments sent to MarketWatch, saying it’s a $50 billion addressable market that the company is tackling through vet services, prescription food, which can only be sold in places where a vet is on the premises, pet insurance and more.

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“We’ve seen the bond between people and their pets only grow deeper as millennials and Gen Zers become a larger proportion of pet owners,” Coughlin told MarketWatch after the earnings announcement.

“Many pet parents are taking better care of their pets than ever before after spending so much time together over the last 18 months.”

Coughlin says these younger age groups are spending more, and will continue to spend to care for their pets.

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“One of the most important points from Petco’s 2Q print is that it drove sequential
growth on its two-year stack even as stimulus tailwinds faded,” wrote UBS in a recent note.

“So, from here, the question becomes whether Petco can generate enough SG&A leverage off of strong sales to offset what is likely to be a declining GM (at least over the next few quarters). For now, we believe that the uncertainty surrounding its gross margin trajectory and its ability to comp the comp will keep its shares range bound.”

UBS rates Petco stock neutral with a $22 price target.

Petco shares, which began trading in January after the initial public offering price at $18 a share, are on track to open Wednesday above the $22 mark. The stock has lost 8.5% over the past three months through Tuesday, but has also bounced back 8.5% over the past month.

The benchmark S&P 500 index

is up 6.9% for the last three months.

This post was originally published on Market Watch

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