The power of pets: Chewy and Petco have become Wall Street darlings
Editor’s Note: A version of this story appeared in CNN Business’ Nightcap newsletter. To get it in your inbox, sign up for free, here.
In today’s business news: Costco has some sad news for analog photographers, Taco Bell is bringing back potatoes, and Petco is taking on Chewy. Let’s get into it.
PICTURE THIS
Costco is shutting down its photo centers next month, so if you still have your 10th grade dance recital on a VHS that you’ve been planning to digitize, now’s the time.
This news is most relevant for those of us old enough to recall “film” and those hours of kinetic anticipation before seeing how your photos turned out. Taking a selfie in the early ’90s was really, really hard.
Among the other photo center services that are going away on February 14 — wait really, Costco? Valentine’s Day? — are ink refills, the ability to take passport photos, and photo restoration. But if you still like holding physical photos like some kind of dinosaur, fear not. Costco still has an online photo center where you can get prints.
BIG (DIGITAL) PICTURE
Photo centers are going extinct, but they were once staples at malls, pharmacies and grocery stores (my favorite one was at the mall, right next to the arcade. May they both RIP). They’ve been in a steady decline since the rise of digital photography.
WATCH OUT, CHEWY
Petco launched its third IPO in company history Thursday, and the red-hot market welcomed it back with open arms. After raising $817 million, Petco’s shares surged 56%, giving the company a market valuation of about $6.2 billion. Side note: major props on Petco’s choice of ticker: WOOF.
Petco has had a makeover since it went private in 2016, my colleague Matt Egan writes. The company, now branded Petco Health and Wellness, invested heavily in e-commerce and building veterinary and other on-site services aimed at making it a one-stop shop.
PANDEMIC POWER MOVE
Pets (and the businesses catering to them) may be the biggest winners of the pandemic. Adoption is up, and people are spoiling the heck out of their bebes.
Just look at Petco rival Chewy, whose shares have skyrocketed 273% in the past year.
This will be a fun rivalry to watch play out. Chewy is an all-online retailer that’s growing much faster than the 55-year-old Petco, but Petco is profitable (its operating income rose by 84% during the first three quarters of 2020 to $127 million.) That said, it’s also saddled $3.2 billion of debt.
BIG PICTURE
Petco couldn’t have picked a better time to rejoin the public market. US-listed companies have raised $14.2 billion through 49 IPOs so far this year — and we’re literally two weeks in. That is by far the highest for this point of the year in stats going back to 1995. Besides Petco, this week also marked strong debuts for online lending startup Affirm and clothing reseller Poshmark, which spiked more than 130%.
RETURN OF THE SPUD
Our relentless coverage of fast food continues. This just in: Taco Bell potatoes are coming back.
We can confirm: Cheesy Fiesta Potatoes and the Spicy Potato Soft Taco will be back on the menu this March after being unjustly removed last summer.
ICYMI, folks were pretty upset about that decision. “Taco bell getting rid of potatoes is worse than my parents’ divorce,” one person tweeted in July.
KEY CONTEXT
The Bell wasn’t alone in trimming its menu last year. Food purveyors of all stripes had to streamline their operations, which meant putting fringe or specialty items on the chopping block.
It takes a lot of time and effort to prepare potato bites, according to Liz Matthews, Taco Bell’s global chief food innovation officer. That’s why they got the boot. But the backlash was bigger than the Bell expected, my colleague Danielle Wiener-Bronner reports.
I guess they’ve been tot their lesson now?
Anyway, we shall not rest until we find out what happened to the Mexican Pizza.
RELATED: Yogurt maker Chobani is launching a new line of ready-to-drink cold coffees, which is a very buzzy segment of the beverage world right now. Much like spiked seltzer, there are countless brands getting in on the trend. They all taste mostly same and are, on the whole, too sweet — I will die on this hill.
NUMBER OF THE DAY
$7 TRILLION
The US national debt spiked by $7 trillion during Trump’s tenure — and it’s about to soar even higher under Biden. Although adding to America’s mountain of debt may be painful, my colleague Matt Egan writes, now is not the time to tighten the belt, considering the scale of the economic crisis and dirt-cheap borrowing costs.
Jobless claims remain well above the worst levels of the Great Recession. The United States lost 140,000 jobs in December, the first decline since the spring. And last week, a staggering 965,000 Americans filed for first-time unemployment benefits, up sharply from 784,000 the previous week.
WHAT ELSE IS GOING ON
- The bitcoin roller coaster continues: the cryptocurrency hit an all-time high of nearly $42,000 less than a week ago. Then it plunged more than 20%. Now it’s trading just shy of $40,000.
- BlackRock, the world’s largest money management firm, ended the year with nearly $8.7 trillion in total assets — an increase of 17% from a year ago.
- Snapchat became the latest social media platform to permanently ban President Trump.
- Christopher & Banks filed for bankruptcy, joining a long a list of retailers that are disappearing scaling down or disappearing from America’s malls.
- Leave the guns and booze at home: Airlines and the TSA are tightening up security heading into Inauguration Day.
