Is Chewy still owned by PetSmart

By Isabella Storyclaire

last updated November 18, 2024

Contributions sourced from

PetSmart splits from Chewy

UPDATE Nov. 11 PetSmart's plans to sell its e-commerce subsidiary, Chewy, did not go exactly to plan, according to an analysis by Scott Josefsberg, head of special situations research at Covenant Review. The deal was called off in November after it was rejected by creditors, Josefsberg explained.

PHOENIX PetSmart, Inc. announced Oct. 26 plans to sell all shares of Chewy Inc. common stock and its related subsidiaries, effectively eliminating Chewy as a subsidiary of PetSmart. The leading US retailer acquired the pet e-commerce platform in May 2017.

Chewy would continue to be owned by BC Partners, which acquired PetSmart and its subsidiaries in March 2015. The two retailers will exist independently going forward.

Following completion of the Chewy Distribution, PetSmart will not own any shares of Chewy common stock. Accordingly, neither Chewy nor any subsidiary of Chewy will be a subsidiary of PetSmart, PetSmart stated in its recent notes offering announcement.

Bloomberg reported on Oct. 22 that BC Partners plans to refinance PetSmart with $1.3 billion in equity and $4.7 billion in debt, totaling $6 billion in capital.

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Chewy (company)

Internet retailer of pet items

Chewy, Inc. is an American online retailer of pet food and other pet-related products based in Plantation, Florida. Chewy went public in 2019 with the ticker symbol CHWY on the New York Stock Exchange.

History[edit]

20112019: Founding, Acquisition and pre-IPO[edit]

Chewy was founded under the name "Mr. Chewy" in June 2011 by Ryan Cohen^[3] and Michael Day.^[4] In March 2012, the company estimated a total yearly revenue of $26 million, despite losing money in its first half year.^[4]^[5] By 2017, the company had revenue of approximately $2 billion and 51% of online pet food sales in the US.^[6]^[7] At that time, CEO Ryan Cohen prepared to take Chewy public as both Petco and PetSmart approached with merger offers.^[8] Petco's offer would be paid for in part using stock, whereas PetSmart offered an all-cash bid that would also allow Chewy to remain a completely separate business.^[9] In 2017, Chewy was purchased by PetSmart, a retail entity backed by private equity firm BC Partners,^[10] for $3.35 billion, which at the time was the largest ever acquisition of an e-commerce business.^[9]

Following the acquisition, Cohen remained CEO and operated the business largely as an independent unit of PetSmart.^[11] Between 2017 and 2018, Chewys sales increased from $2.1 billion to $3.5 billion,^[12] with 66% of sales coming from customers signed up for automatic recurring shipments.^[9] Sumit Singh succeeded Ryan Cohen as CEO of Chewy in March 2018.^[13]

2019present: Post-IPO[edit]

In 2019, Chewy filed an S-1 for an initial public offering, intending to trade under the ticker symbol CHWY. In its filing, Chewy reported a net loss of $268 million on total sales of $3.5 billion for its 2018 fiscal year.^[14] In the 2019 fiscal year, Chewy earned net sales of $4.85 billion, a 40 percent year-over-year increase on a 52-week basis. The company saw increased demand from millions of existing and new customers as the business sustained growth throughout the economic disruption of the COVID-19 era.^[15]^[16]

Chewy launched a free tele-triage service called Connect With a Vet in October 2020.^[17] In November 2020, Chewy announced that it would produce and fulfill orders of customized prescription medications, commonly referred to as compounding, for instances where commercial alternatives are absent.^[18] In 2020, it was announced that Chewy and PetSmart would split to operate as separate companies.^[19]

In March 2021, Chewy reported revenue of $2.04 billion for Q4 of 2020, making it Chewy's first quarter of net profitability, and net sales of $7.15 billion for the fiscal year.^[20]^[21] In March 2022, Chewy reported net sales of $8.89 billion for the 2021 fiscal year.^[22]

In August 2022, Chewy announced the introduction of the CarePlus program, which provides pet insurance and wellness plans. This initiative marked Chewy's entry into the health insurance sector for pets.^[23]

In the 2022 fiscal year, Chewy's net sales grew 13.6% since 2021, to $10.1 billion.^[24] Following this, in December 2023, Chewy expanded its healthcare services by launching Chewy Vet Care. This service includes the establishment of veterinary practices that offer routine check-ups, urgent care, and surgical procedures.^[25]

Corporate affairs[edit]

The company's founder and first CEO, Ryan Cohen, stated that he used Jeff Bezos's 1997 letter to shareholders as a roadmap for how to grow Chewy by using Amazon's guidelines on the convenience of shopping online and customer service.^[26] Cohen stepped down in March 2018,^[27] and Sumit Singh was named the company's CEO in March 2018 after working as its COO since 2017 and previously as an executive at Dell and Amazon.^[28]^[29]^[30]^[31] Singh led the company through its IPO; Chewy grew to a market capitalization of $40 billion. The company reported to have employed around 7,000 people in the United States in 2018 and more than 12,000 by 2019.^[32]^[33] The company has more than 18,000 employees in the United States as of 2021.^[34] Chewy is chaired by Raymond Svider of BC Partners. The private equity firm continues to own around 80percent of Chewy following the latter's IPO, representing 98percent of the voting power.^[35]

References[edit]

^ "Chewy Inc". Bloomberg. Retrieved July 26, 2020.
^ "Chewy Inc. 2022 Annual Report (Form 10-K)". U.S. Securities and Exchange Commission. March 22, 2023.
^ "Pet retailer Chewy.com is part of a growing breed". Sun Sentinel. June 11, 2015. Retrieved August 11, 2023.
^ ^a ^b "Pet product online retailer sees growth in a bullish market". South Florida Business Journal. March 30, 2012. Retrieved August 11, 2023.
^ Woo, Stu (March 6, 2012). "Pets.com 2.0". The Wall Street Journal. Retrieved October 13, 2023.
^ Heroux, Mary (January 29, 2018). "Why has Chewy.com succeeded? Co-founder points to its customer service and changing times". Sun Sentinel. Retrieved October 13, 2023.
^ Dahlberg, Nancy (April 19, 2017). "PetSmart is buying Chewy.com in possibly the biggest e-commerce acquisition ever". The Los Angeles Times. Retrieved October 13, 2023.
^ Adams, Susan (January 10, 2017). "The Man Who Found Gold In Dog Food". Forbes. Retrieved October 13, 2023.
^ ^a ^b ^c Gottfried, Miriam (October 1, 2019). "How PetSmart Swallowed Chewyand Proved the Doubters Wrong". The Wall Street Journal. Retrieved October 13, 2023.
^ "Meet the Young Founders of Chewy.com, Which PetSmart Just Bought for $3.35 Billion". Inc. April 19, 2017. Retrieved July 20, 2023.
^ Armental, Maria (April 18, 2017). "PetSmart's Latest Bite at E-Commerce: Chewy.com". The Wall Street Journal. Retrieved October 13, 2023.
^ Hirsch, Lauren; Picker, Leslie (June 13, 2019). "Chewy.com, PetSmart's online business, prices IPO at $22 a share, above expected range". CNBC. Retrieved October 13, 2023.
^ "Founder of Chewy.com stepping down as CEO". South Florida Business Journal. March 5, 2018. Retrieved July 20, 2023.
^ "Online pet-food retailer Chewy.com files to go public". Business Insider. April 29, 2019. Retrieved July 20, 2023.
^ "Chewy Announces Fourth Quarter and Full Year 2019 Financial Results". markets.businessinsider.com. Retrieved June 4, 2021.
^ MacLean, Jayson (April 4, 2020). "Chewy is eating up the competition during the COVID-19 crisis". Cantech Letter. Retrieved June 4, 2021.
^ Repko, Melissa (October 28, 2020). "Chewy launches virtual vet visits as pandemic fuels pet boom". CNBC. Retrieved April 16, 2021.
^ Tseng, Andrew (December 7, 2020). "Why Chewy Jumped 26% in November". NASDAQ. Archived from the original on April 16, 2021. Retrieved April 16, 2021.
^ "Reports: Chewy, PetSmart Split to Operate as Separate Entities". Pet Age. October 28, 2020. Retrieved July 20, 2023.
^ "Chewy shares soar as COVID-19 buying drove subscriptions, sales above $2B in Q4". news.yahoo.com. March 30, 2021. Retrieved April 16, 2021.
^ Verdon, Joan. "Chewy Fetches A Profit, Sees Strong Growth Ahead". Forbes. Retrieved August 30, 2022.
^ "Chewy Inc. 2021 Annual Report (Form 10-K)". U.S. Securities and Exchange Commission. March 29, 2022.
^ Kaiser, Zigi (August 8, 2022). "Chewy Has a New Offer Pet Owners May Love". TheStreet. Retrieved March 6, 2024.
^ "Chewy Plans International Expansion Following 13.6% Net Sales Growth in FY2022". retailtouchpoints.com. Retrieved March 1, 2024.
^ "Chewy to open veterinary practices in Florida, Colorado". avma.org. Retrieved March 1, 2024.
^ Verdon, Joan (January 26, 2020). "Ryan Cohen Started A Company That Took On Amazon, And Sold It For $3 Billion. Now He's Thinking About What's Next". Forbes. Retrieved July 14, 2020.
^ "Co-founder Ryan Cohen stepping down as CEO of Chewy, a homegrown success story". miamiherald.typepad.com. Retrieved June 4, 2021.
^ Stephanie Crets, "Roundup: Chewy CEO steps down and other personnel news," Internet Retailer, March 16, 2018.
^ Chesto, Jon (December 25, 2019). "Chewy CEO sees big job growth in Boston". Boston Globe. Retrieved June 8, 2020.
^ Hirsch, Lauren (April 29, 2019). "PetSmart's online business, Chewy.com, files to go public". CNBC.
^ "Chewy founder leaves as former Amazon exec takes over". Retail Dive.
^ Chesto, Jon (December 25, 2019). "Chewy CEO sees big job growth in Boston". Boston Globe.
^ Pounds, Marcia Heroux. "Why has Chewy.com succeeded? Co-founder points to its customer service and changing times". sun-sentinel.com.
^ "About Chewy.com". www.chewy.com. Retrieved June 7, 2021.
^ Nylen, Leah (March 9, 2023). "PetSmart, Chewy Overlapping Directors Focus of DOJ Complaint". Bloomberg News.

PetSmart and Chewy are splitting three years after their tie-up

In the typical retail horror story, Amazon lurks behind the door wielding the metaphorical chainsaw.

But in the case of pet goods in 2016, it was fast-growing, online-focused Chewy that bit into the revenue of market leader PetSmart. So PetSmart, backed by BC Partners, took on debt to acquire the newfangled threat for $3.3 billion in 2017ostensibly to galvanize its own digital transformation.

But now, as both companies are getting a boost from avid pet lovers, BC Partners is splitting the duo up. The move will result in a lower debt-to-income ratio for PetSmart (as Chewy is unprofitable), with BC Partners planning to recapitalize PetSmart with $1.3 billion in equity. BC also plans to raise $4.7 billion or so in debt from investors for the 34-year-old chain. Shares of Chewy, meanwhile, will be transferred to a BC Partners-led group. Moodys upgraded PetSmarts credit rating this week on the news.

Sure, hindsight is 20/20, but signs of a potential split were littered through the past few years. Just read my colleague Phil Wahbas excellent May feature on the battle for the pet market.

Despite the 2017 tie-up, the two businesses have remained separate aside from the cross-selling of some products, with some in the industry viewing the acquisition as less of an e-commerce strategy and more of a financial-management tactic, per the feature. By staying separate, Chewy was able to command a higher e-commerce valuation at its IPO rather than get bogged down by brick-and-mortar numbers. That IPO, in turn, helped PetSmart pay off some of its sizable debt load.

In strategy, too, the two have diverged. While e-commerce has been the buzzword of the last decade, market leader PetSmart was able to bring its sales decline to a near-halt last year by focusing on in-person services like veterinary care, doggy day care, and grooming, with just 4% of its sales coming from online (this year, sales have grown 5.5% so far). But Chewy has continued to lean into the e-commerce trendbeating even Amazon in sales of pet goods in 2019.

Meanwhile, competitor Petco, backed by CVC Capital Partners and the Canada Pension Plan Investment Board, is barking after a sale or public offering.

ANOTHER UNICORN BUST: Renrenche, a Chinese car trading website once valued at $1.4 billion with backers including Goldman Sachs and Tencent, is now in talks to sell major assets for a little over $1,000. Read more.

Lucinda ShenTwitter: @shenlucindaEmail: [email protected]

VENTURE DEALS

- Yuanfudao, a Chinese tutoring platform, raised $2.2 billion in funding, valuing it at $15.5 billion. Tencent led the G1 round of funding round and was joined by investors including Boyu Capital, Hillhouse Capital and IDG Capital. DST Global led its G2 funding round and was joined by investors including GIC, CITICPE, Temasek, TBP, DCP, Ocean Link, Danhe Capital and Greenwoods.

- Eat Just, a San Francisco-based startup making plant-based eggs, is seeking to raise at least $200 million in a deal that could value it at over $2 billion, per Bloomberg. Eat Just investors include Khosla Ventures and Founders Fund. Read more.

- Applied Intuition, a Sunnyvale, Calif.-based maker of software for autonomous vehicle testing, raised $125 million in Series C funding. Investors include Lux Capital, Andreessen Horowitz, and General Catalyst.

- Sirnaomics, a company developing RNAi therapeutics, raised $105 million in Series D funding. Rotating Boulder Fund led the round and was joined by investors including Walvax Biotechnology and Sunshine Riverhead Capital.

- AavantiBio, a Cambridge, Mass.-based gene therapy company, raised $107 million in Series A funding. Investors include Perceptive Advisors, Bain Capital Life Sciences, and RA Capital Management.

- ACV Auctions, a Buffalo, N.Y.-based online auto marketplace, raised $55 million in funding. Durable Partners led the round. Read more.

- Allonnia, a Boston-based waste and wastewater treatment company, raised $40 million in Series A funding. Investors include Ginkgo Bioworks, Battelle, General Atlantic, Cascade Investment, and Viking Global Investors.

- Araris Biotech AG, a Zurich, Switzerland-based company pioneering antibody-drug conjugate (ADC)-linker technology, received an additional CHF 12.7 million ($14 million) in seed funding. Pureos Bioventures led the round and was joined by investors including 4BIO Capital, btov Partners, Redalpine, VI Partners and Schroder Adveq.

- Loyal, an Atlanta, Ga.-based A.I. conversation platform for health care providers, raised $12.5 million in Series A funding. Concord Health Partners led the round.

- TeleSense, a Sunnyvale, Calif.-based agricultural IoT startup, raised $10.2 million in Series B funding. Finistere Ventures led the round.

- Cohere Health, a Boston, Mass.-based digital health company, raised $10 million in funding. Flare Capital Partners and Define Ventures led the round.

- Lili, a New York City-based banking app for freelance workers, raised $15 million in funding. Group 11 led the round and was joined by investors including Foundation Capital, AltaIR Capital, Primary Venture Partners, Torch Capital, and Zeev Ventures.

- EveryoneSocial, a Salt Lake City-based employee-focused social platform, raised $7.6 million in Series A funding. Next Frontier Capital led the round and was joined by investors including Crane Group and Epic Ventures.

- Here.fm, a New York-based video chat room platform, raised $2.9 million in seed funding. FirstMark Capital led the round and was joined by investors including Y Combinator. Read more.

- Silverflow, an Amsterdam-based payment technology company, raised 2.6 million ($3.1 million) in seed funding. Crane Venture Partners led the round and was joined by investors including INKEF Capital.

- Render, a San Francisco-based dev-ops platform, raised $4.5 million in extended seed funding. General Catalyst led the round and was joined by investors including South Park Commons Fund, Lee Fixel, Elad Gil and GitHub CTO Jason Warner.

- OnSite Waste Technologies, a Newport Beach, Calif.-based company focused on the sterilization of medical waste, raised $3.5 million of Series A funding. Mark IV Capital led the round.

- Cobble, a New York-based decision-making app, raised $3 million in seed funding. Investors included Kerr Tech Investments. Read more.

- Ware, a San Francisco-based warehouse drone technology startup, raised $2.5 million in seed funding. UP Partners led the round and was joined by investors including Bloomberg Beta, and 2048 Ventures.

- PredictSpring, a San Francisco-based POS company, raised an undisclosed amount of funding from Salesforce Ventures.

PRIVATE EQUITY

- BC Partners plans to split PetSmart and Chewy, two pet goods retailers. It plans to recapitalize PetSmart with $1.3 billion, per Bloomberg. Read more.

- Syncapay, backed by Centerbridge and Bain, acquired the North American unit of Wirecard, the German payments firm. Read more.

- TIBCO Software, backed by Vista Equity Partners, agreed to acquire Information Builders, a data and analytics software company, per Reuters. Read more.

- Havencrest Capital Management acquired ThermoTek, a Flower Mound, Texas-based provider of temperature management solutions to the medical and industrial end markets. Financial terms weren't disclosed.

- Levine Leichtman Capital Partners acquired NMiCertin B.V., a Dutch metrology testing company, from First Dutch Innovations. Financial terms weren't disclosed.

- Oakley Capital agreed to acquire WindStar Medical, a German consumer healthcare company. Financial terms weren't disclosed.

- Achievers, backed by Silver Lake and P2 Capital, acquired TemboSocial, a Toronto-based employee feedback tool. Financial terms weren't disclosed.

- Finastras Filogix, backed by Vista Equity, acquired Doorr, a Toronto-based provider of point-of-sale mortgage software. Financial terms weren't disclosed.

EXITS

- PayPal Holdings is considering an acquisition of BitGo, a Palo Alto, Calif.-based crypto custodian, per Bloomberg. Craft Ventures, Pantera Capital, and others back Bitgo. Read more.

- Ares Management is considering a sale of Farrow & Ball, a U.K.-based paint maker, per Bloomberg. Read more.

- Symplr, backed by Clearlake Capital Group and SkyKnight Capital, agreed to acquire TractManager, a healthcare software platform, from Arsenal Capital Partners. Financial terms were not disclosed.

- Parcom Private Equity acquired a majority stake in Group of Butchers, a Netherlands-based supplier of artisanal specialty meat products, from Equistone Partners Europe. Financial terms weren't disclosed.

- Viagogo may have to sell all or part of StubHub, a ticketing platform, after the U.K.s competition watchdog said the $4.05 billion acquisition could hurt consumers. Read more.

OTHER

- Flipkart plans to acquire a 7.8% stake in Aditya Birla Fashion, an Indian clothing retailer, for about $204 million. Read more.

- EQT Corp. is seeking to acquire CNX Resources Corp. (NYSE: CNX), a U.S. natural gas rival. Read more.

- Cognizant (NASDAQ: CTSH) agreed to acquire Bright Wolf, a technology services provider specializing in industrial internet of things solutions. Financial terms weren't disclosed.

- Wells Fargo & Co, the U.S. banking giant, is exploring a sale of its asset management business, per Reuters. Read more.

- Adidas is exploring a sale of Reebok, one of its sports brands, per Bloomberg.

IPO

- Lufax, the Chinese fintech lender, plans to raise $2.2 billion in an offering of 175 million ADSs priced between $11.50 to $13.50. Ping An Group backs the firm. Read more.

- Leslies, Inc. a U.S. pool and spa care company, plans to raise $600 million in an offering of 40 million shares (25% insider sold) priced between $14 to $16. BlackRock plans to buy $100 million worth of shares. L Catterton and GIC back the firm. Read more.

- Abcam, a U.K.-based maker of biological reagents, raised $157 million in an offering of 8.9 million ADSs priced at $17.50. T. Rowe Price Associates, Durable Capital Partners, and Aberdeen Asset Management back the firm. Read more.

SPAC

- CarLotz, a Richmond, Va.-based used-car selling platform, plans to go public via merger with Acamar Partners Acquisition Corp, a SPAC, valuing it at $827 million including debt.

- Altimar Acquisition, a SPAC formed by HPS Investment Partners, raised $250 million.

- Zanite Acquisition filed to raise up to $200 million.

- Churchill Capital Corp V, a blank check company formed by former Citi executive Michael Klein, now plans to raise $400 million, up 33% from its previous estimate.