In an effort to cut costs and adapt to a competitive pet care market, Petco, the San Diego-based animal supply and health care retailer, announced layoffs affecting 56 workers at its headquarters, according to the San Diego Union-Tribune. The company cited inflation, increased competition, and shifting consumer spending patterns as reasons behind the layoffs, which impact senior management, engineering, marketing, and IT roles. Meanwhile, another major pet retailer, PetSmart, settled a lawsuit over deceptive pricing allegations for $1.46 million, as we reported here at Hoodline San Diego.
In other news, the collaboration between Lowe's and Petco has deepened, with the companies announcing the expansion of their store-in-store concept to nearly 300 Lowe's locations by the end of the year, primarily focusing on rural communities across the country, as stated in a press release. While Petco faces layoffs and financial challenges, this partnership marks a strategic move towards providing a convenient, one-stop shopping experience for customers who own pets and requiring home improvement products.
As for Petco's recently announced layoffs, the company filed a Worker Adjustment and Retraining Notification (WARN) notice with the state on Tuesday, July 25. The layoffs will occur in two rounds, with the last day for 47 employees being Friday, and the remaining nine employees having their last day on October 27. The positions being eliminated include chief marketing officer, senior vice president, several vice presidents, and multiple directors. The layoffs follow a previous round of job cuts in 2017, in which Petco eliminated 180 positions, including about 50 job losses in San Diego. At that time, the company employed approximately 650 local workers.
The layoffs come as Petco reported a drop in net income and cash flow year over year, with net income decreasing $21.4 million to $14.9 million and operating cash flow falling 34.5%. Although its net revenue has increased 5.4% year over year, reaching $1.56 billion, the company faces challenges due to inflation, customer spending behaviors, and increased competition in the industry. In a statement, Petco acknowledged these challenges, stating that actions were being taken to streamline their cost structure and adapt to shifting customer demands.
While the layoffs at Petco bring attention to the challenges faced by the company, PetSmart, another major pet retailer in San Diego, has also faced legal issues related to deceptive pricing. Accused of overcharging customers, PetSmart agreed to pay a $1.46 million settlement, as noted in a Hoodline article, although the company admitted no wrongdoing. The case involved customers being charged higher prices than those advertised, raising concerns about transparency and fairness in pricing practices within the pet care industry overall.
Despite these challenging times for pet care retailers, the partnership between Lowe's and Petco shows potential for growth and collaboration. The expansion of their store-in-store concept further establishes the companies' commitment to offering resources and services for pet owners within their community. With 70% of U.S. households owning pets, according to the press release, this partnership aims to provide pet owners with convenient access to pet supplies, veterinary care, and home improvement products under one roof. These store-in-store locations will carry a range of products from Petco private and national brands and offer regular Vetco Clinics services at select Lowe's stores.
In conclusion, the recent layoffs at Petco highlight the challenges faced by pet care retailers amidst industry pressures such as inflation, competition, and shifting consumer behaviors. While Petco adapts to these changes, it also faces a major competitor, PetSmart, who has recently settled a lawsuit over deceptive pricing allegations. However, in the face of these challenges, the expansion of the Lowe's and Petco store-in-store initiative represents a strategic approach to meeting customer needs and offering a convenient, one-stop shopping experience.
