Pet Valu, a leading specialty retailer of pet food and pet-related supplies in Canada, has opened what it describes as the largest pet specialty distribution centre in Canada – a 670,000-square-foot state-of-the-art facility in Brampton, Ontario.
Richard Maltsbarger, President and Chief Executive Officer of Pet Valu, said the centre represents a key milestone in the company’s nationwide $110-million supply chain transformation and the GTA DC will bring unprecedented scale and automation to Canada’s pet sector as the largest distribution centre and robotics automation installation dedicated to serving the pet specialty industry.
“Today marks a significant accomplishment for our teams, whose meticulous planning and tireless efforts have enabled Pet Valu to take a big step towards building Canada’s strongest pet specialty distribution network,” he said.
“As the largest pet specialty facility in Canada, our GTA DC will benefit multiple aspects of our business through capacity to support future growth, efficiencies to accelerate speed to customers, tailored facilities to support employees, and job creation to support the communities we serve. We look forward to enhancing distribution services to our corporate and franchised stores in Central and Eastern Canada, including into our Chico banner in Quebec.
“As we grew significantly both through units and the overall growth in the pet population over the past three-plus years, we quickly exceeded the supply chain capacity that we had within our existing network. So, we had been bringing on board additional third-party managed storage over each of the past three years in order to keep up with the great growth that we’ve achieved. And we knew we needed to make the right types of investments to be able to keep up with this growth and continue to grow over the long term. During late 2021, early part of 2022 we undertook a remapping of our entire nationwide supply chain network and identified the opportunity to really build three core distribution centres. One in the Greater Toronto Area, one in Calgary and one in Vancouver to service our growing set of stores and franchisees across the nation.”
Pet Valu is Canada’s leading retailer of pet food and pet-related supplies with over 750 corporate-owned or franchised locations across the country.
Maltsbarger said the company started with the GTA first because it’s the largest serviced area, servicing all of Ontario, Quebec, New Brunswick, Prince Edward Island, Newfoundland and Nova Scotia.
“Secondly, we acquired our Chico chain in Quebec in February of 2022 and planned right away from the beginning that longer term we would become the wholesale distributor to our Chico franchisees, much as we are to our Pet Valu franchisees today because on the Pet Valu franchise part of the business we provide 90 per cent of the products to our Pet Valu franchisees. They are also a distribution network. Today, at Chico that’s less than 10 per cent,” he said.
“Opening up this new facility now gives us the opportunity to continue to serve our Pet Valu franchisee and corporate stores but now also over time expand our ability to service our new Chico franchisees.”
The facility, which was built by Orlando Corporation, is about the size of 11 football fields, employing about 500 jobs. Highlights include a café, nursing room, prayer rooms, training room, driver’s lounge and open concept office space. The facility also employs advanced health and safety features, such as ergonomically-designed workstations and equipment.
Starting in the first half of 2024, Pet Valu plans to introduce automation capabilities into the GTA DC, with the installation of Canada’s largest goods-to-person robotics installation dedicated to pet specialty products. The design will have the capability to process orders same day, while improving pick productivity by more than 50 per cent and reducing the overall footprint compared to a traditional manual picking solution. The facility’s warehouse processes, systems and automation is expected to reduce costs per case and drive productivity improvements as well as provide improved product availability, faster order processing, and overall customer service levels for stores and ecommerce customers.
“Our GTA DC establishes a new benchmark for pet specialty distribution capabilities in Canada. In addition to providing a modern supply chain network that can supply our stores with flexible, reliable and accurate service, and world-class on-shelf availability in store and online, the facility supports the individual needs of our diverse workforce,” said Nico Weidel, Chief Supply Chain Officer at Pet Valu.
Pet Valu said it expects the GTA DC to be fully operational by the first half of 2024, following a phased transition period. The facility is commencing receipt and shipment of bulk items such as dry pet food and litter. Once installation and setup of automation equipment is complete in early 2024, receipt and shipment of piece-pick items such as toys and collars will transition over to the GTA DC. It said it will scale down use of its legacy distribution facilities and third-party storage space in the Greater Toronto Area throughout these phases.
Pet Valu said it plans to invest $110 million over four years to modernize its distribution networks in the Greater Toronto Area, Vancouver and Calgary.
Progress has already begun in Vancouver, where Pet Valu has signed a lease for a new, near-complete facility, targeting start-up in mid-2024.
Maltsbarger said Pet Valu continues to see really strong fundamentals helping to support the long term growth in the pet industry.
“For 30-plus years now, we’ve continued to see growth in the pet population alongside overall Canadian population growth,” he said. “So as the Canadian population grows, we continue to see a similar percentage usually in the 65 per cent (range) of Canadian household levels generally own pets and that’ll continue to be at or slightly higher than that over the long-term.
“We’ve also continued to see the long term trend of premiumization and humanization. As we continue to see our devoted pet lovers make their pets even more a part of their life, we see them buying better ingredient foods, often human grade quality food. We see them upgrading the beds and the crates and the toys that they purchase for their pets. And just overall really beginning to see the pet even more and more as part of the family. All of that helps to contribute to what’s been a long-run, 30-plus year growth streak within the pet industry and we continue to see that in place for the long term.”
He said the long-term opportunity is for more than 1,200 locations in the country – that’s an additional 500 stores over the next 10 to 15 years. The company targets between 40 and 50 new store openings per year.
“In total we do about 100 real estate projects per year. About 40 to 50 are focused on new stores and about another 50 to 60 are focused on renovations, expansions or otherwise going in and doing significant touch up and maintenance to our existing stores to make sure that our entire network stays fresh.”
In early August, the company reported its second quarter financial results, indicating system-wide sales of $343.9 million, which was an increase of 10.1 per cent versus the prior year. Same-store sales growth was 6.0 per cent, with both basket and traffic growth contributing. Revenue was $256.4 million, up 12.6 per cent versus last year. Adjusted EBITDA was $53.8 million, up 3.9 per cent versus the prior year, representing 21.0 per cent of revenue. Operating income was $40.2 million, up 2.3% versus the prior year. Net income was $24.1 million, down from $25.3 million in the prior year. Adjusted Net Income was $26.3 million or $0.36 per diluted share, compared to $27.9 million or $0.39 per diluted share, respectively, in the prior year.
In the quarter, the company opened seven new stores and ended the quarter with 758 stores across the network.
The company said it expects 2023 revenue between $1.05 and $1.075 billion, driven by same-store sales growth between seven per cent and 10 per cent and 40-50 new store openings.
If this new DC is to serve Ontario and east, would it not have been better to build it in Oshawa or further east? Brampton/Mississauga are already over-DCed adding to GTA traffic congestion.