Petco Health and Wellness pany(WOOF) - 2021 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Full year 2021 revenue growth was 18%, translating to a 22% growth in adjusted EBITDA, reflecting the strength of the business model and operating leverage [11][63] - In Q4, net revenue reached $1.51 billion, up 13% year-over-year, with comparable sales growth of 14% [57] - Q4 adjusted EBITDA was $172 million, an increase of 16% from the prior year, and adjusted EPS improved by 65% to $0.28 [62] Business Line Data and Key Metrics Changes - Services and other grew 64% on a two-year basis and 31% year-over-year, benefiting from the expansion of membership and subscription programs [58] - Revenue from consumables increased by 29% on a two-year stack and 19% year-over-year [57] - The pharmacy business grew 66% year-over-year, indicating strong growth in both Rx food and prescriptions [34] Market Data and Key Metrics Changes - The company gained market share across digital and brick-and-mortar channels, with a notable increase in customer acquisition, adding nearly 800,000 net new customers in Q4 [19][29] - Digital revenue growth was 143% over two years, with a 25% increase year-over-year, showcasing strong performance in the digital space [29] Company Strategy and Development Direction - The company is evolving into a "Retail 3.0" player, leveraging omnichannel advantages and robust service offerings [9] - A transformational transaction to purchase the remaining stake in the Thrive hospital joint venture was announced, enhancing the company's veterinary services capabilities [22][54] - The focus remains on long-term above-market growth through unique ecosystem offerings and strategic growth initiatives [16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to drive continued growth and market share gain in 2022, expecting net revenue of $6.15 billion to $6.25 billion [69] - Inflationary pressures were acknowledged, but the company has been effective in passing through input price increases without a material impact on unit volumes [60][84] - The company is committed to improving the lives of pets and pet parents, with significant community engagement initiatives [44][45] Other Important Information - The company ended 2021 with 1,433 Pet Care Centers in the U.S. and Puerto Rico, with plans to maintain a similar footprint in 2022 [65][66] - The company has a strong liquidity position, ending the quarter with $650 million, including cash and availability on the revolving credit facility [67] Q&A Session Summary Question: Pricing expectations within the full year top line guidance - Management noted that the pet industry is relatively immune to macroeconomic trends, with premiumization continuing to drive growth [75][76] Question: Impact of inflation on same-store sales increase - Inflation contributed a low single-digit impact to total comparable sales, with no elasticity impact observed [84] Question: Customer acquisition and performance of the 2020 cohort - The company added approximately 800,000 new customers in Q4, with strong performance across both online and brick-and-mortar channels [94][96] Question: Update on the Lowe's partnership - The partnership with Lowe's is seen as a significant opportunity to access new customers and enhance brand visibility [99][100] Question: Vital Care 2.0 potential - Management is optimistic about reaching one million customers for Vital Care, viewing it as a key driver for customer loyalty and spending [105][106]