☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended January 30, 2021 OR Commission File Number 001-39878 Petco Health and Wellness Company, Inc. (Exact name of Registrant as specified in its Charter) | Delaware | 81-1005932 | | --- | ...

Petco Fourth Quarter and Fiscal 2020 Earnings Call March 18, 2021 Safe Harbor and Non-GAAP Measures This Presentation contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 as contained in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, concerning expectations, beliefs plans, objectives, goals, strategies, future events or performance and underlying assumptions and other state ...

Financial Data and Key Metrics Changes - Fourth quarter revenue grew 16% to $1.3 billion, with comparable sales up 17% and 20% on a two-year basis, driven by 92% growth in digital, 13% growth in services and vet, and 10% growth in brick-and-mortar merchandise [61][62] - Full year 2020 revenue grew 11% from 2019 to $4.9 billion, with total comp sales of 11% [54] - Adjusted EBITDA for the fourth quarter was $149 million, an increase of 13% from Q4 2019, while full year adjusted EBITDA was $484 million, up 14% from the prior year [60][64] Business Line Data and Key Metrics Changes - Digital business saw over 100% growth in 2020, with repeat delivery representing almost 45% of total digital revenue [54][55] - Services and vet businesses benefited from grooming momentum and the scaling of vet hospitals, with 44 new full-service vet hospitals added in 2020, ending the year with 125 locations [56][34] - Own brands drove double-digit growth, rapidly approaching 30% penetration, with significant growth in the food brand WholeHearted and premium supplies brand Ready [28][29] Market Data and Key Metrics Changes - The pet category is projected to grow at 6% to 7%, with higher growth in premium food, services, vet, and digital areas [21][22] - The company added approximately 3 million new pets in 2020, leading to increased spending per pet, which has historically risen by 4% annually [19][20] Company Strategy and Development Direction - The company aims to monetize its unique end-to-end pet health and wellness ecosystem, focusing on integrated multi-channel experiences [22][24] - Plans to expand its veterinary hospital business to 900 locations, enhancing customer lifetime value and retention [35][36] - The company is committed to sustainability and improving the lives of pets and pet parents, with initiatives to eliminate artificial ingredients and promote positive dog training [46][49] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued growth driven by increased pet ownership and a strong multi-year growth runway across all business areas [72][70] - The company anticipates a lift from federal stimulus and a broad-based economic recovery, which should benefit pet spending [51][72] - Management highlighted the importance of customer retention and the shift towards recurring revenue models, which are expected to support baseline growth into 2021 [114] Other Important Information - The company ended Q4 with 1,454 Pet Care Centers, down 23 locations from a year ago, and plans to add over 10 Pet Care Centers in Mexico [65][66] - The company successfully completed its IPO, yielding net proceeds of approximately $939 million, which will be used to pay down debt and invest in growth [68][69] Q&A Session Summary Question: Gross margins and their impact - Management indicated that gross margins for FY'20 and Q4 were in line with expectations, with continued improvements expected in high-profit areas like own brands [79][80] Question: Strength of business driven by pandemic vs. transformation - Management noted that the transformation was already underway before COVID, positioning the company well to capture increased demand during the pandemic [86][88] Question: E-commerce competitive advantages - Management highlighted structural advantages in fulfillment and delivery that allow for faster service at lower costs compared to pure online players [99] Question: Promotional environment and gross margin dynamics - Management stated that promotional activity was reduced in 2020, allowing for margin improvements, and they do not expect increased promotional pressure in 2021 [104][106] Question: Customer retention and repeat behavior - Management reported strong retention rates among new customers acquired during COVID, with a shift towards recurring revenue models enhancing predictability [114][116]