Pet Valu, the leading Canadian specialty retailer of pet food and pet-related supplies, aggressively grew its store presence in Canada during the pandemic with plans for continued significant growth.
Richard Maltsbarger, President and Chief Executive Officer, said the brand, with more than 700 stores, opened 20 new stores in 2020 and 30 new stores in 2021.
He said the pandemic has been tough on a personal level for the past two years on people, including the animal care experts working at Pet Valu stores. Also global supply chain disruptions and pandemic restrictions have been difficult for all retailers.
“But at the same time, we have to accept that the pandemic has also created opportunity in the pet industry. A recent study conducted by Narrative Research in November of 2021, on top of a study they did similarly in November of 2020, indicates that about three million new pets were adopted in Canada in the past two years which would be about five times the normal rate of adoption,” he said.
“That creates a significant lift in overall total market span. If you look at these three million pets that were adopted, over 80 per cent of them are less than two years old. So when you look at an average dog or cat lifecycle being somewhere around eight to 15 years that would indicate that we’ve got at least about a decade ahead of us where this overall increase in the pet population in Canada is going to continue to be an annuity.”
Research has indicated pet owners spend about $700 to $800 per year for a cat and a little more than $1,000 for a dog.
“So if you look at the majority of these pets being less than two years old, we’ve got a decade of those annual spends ahead of us. We do realize that the very significant growth in the industry, being more than double digits in the past two years, is above the normal level of about six per cent per year,” said Maltsbarger. “We don’t expect that significant lift will continue.
“But remember, this industry has been growing at about six per cent every year including recessionary years since the mid 90s, really driven by the humanization of pets, the overall improvement and increase in quality of the ingredients going into pet foods and those longer term trends will help to continue to support us just now on a much larger population of pet owners in Canada.”
In the fourth quarter of 2021, system-wide sales for Pet Valu were $288.5 million, an increase of 11.7 per cent. Net income was $26.7 million, up from $13.8 million in the prior year.
For fiscal year 2021, system-wide sales were $998.1 million, an increase of 18.6 per cent. Net income was $98.8 million, up from $28.6 million in the prior year.
For the full year 2022, Pet Valu said it expects same-store sales growth of between six and nine per cent and 30 to 45 new store openings inclusive of five to 10 stores under the Chico banner in Quebec.
Earlier this year, Pet Valu announced its entry into the Québec market with the acquisition of Les Franchises Chico Inc. Chico is Québec’s largest franchisor of pet specialty stores, with 66 locations across the province. It was founded in 1983 by Pierre Charbonneau and Michel Joly. In 2021, it generated system-wide sales of approximately $79 million and revenue of approximately $7 million. Maltsbarger said the Chico brand has opened 20 new stores in the past two years.
“Together the two chains have opened 70 stores across the past two years which is about as much growth as the rest of all of Canadian pet combined,” said Maltsbarger. “For us, it really is the strength of the demand from new owner/operator based franchisees across Canada. The unique and great part of our model is between Chico and Pet Valu combined we have more than 300 local owner/operators. No single owner has more than six stores and the vast majority, 67 per cent, own a single store, about 23 per cent own two stores. So 90 per cent of our owners only operate one or two stores.
“Everybody is a required owner/operator. It truly is a model that keeps the owner close to the operation in the local community and especially during COVID, and the pandemic, a lot of people have really asked themselves what do I want to do professionally that’s both fiscally but also personally rewarding. We found a lot of devoted pet lovers have come to us in the past two years and said I really do believe that my avocation and my vocation should be the same thing and I’d love to become part of your network.
“As we look ahead to 2022, we target another year of growth ahead of our long-term model. We are also excited to welcome Chico to the Pet Valu family, providing us with an experienced entry into Quebec, and positioning us to better serve Canada’s devoted pet lovers with 700 stores across all 10 provinces.”
The Pet Valu family of stores consists of Pet Valu across all provinces, Paulmacs Pets in Ontario, Bosley’s by Pet Valu in BC, Total Pet with one store in Alberta and the rest in BC and Tisol Pet Nutrition & Supply in BC.
“This is a people-based business. The difference that we bring to the marketplace and what’s fundamentally most important to me is I believe that your customers can’t have a better experience than your people do. So we have really reinvested both on the corporate side and the franchise side into the compassion and expertise of our ACE’s (animal care expert) in the stores. Last year, we updated our expert certification for our ACE’s in the stores and actually increased hourly wages as a reward for those who achieved expert level certification,” said Maltsbarger.
“And we’ve really begun to see that positive flywheel. Whereas the industry has grown on a two-year growth rate of about 20 per cent, we’ve achieved a two-year growth rate in excess of 30 per cent. So we’ve actually grown 50 per cent faster than the industry. And I really credit our franchise owners, our in-store ACE’s and the leaders of our business with really bringing their whole self, their true compassion as a devoted pet lover and someone who enjoys serving other humans.”
