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Chewy debut gives Wall St. a taste of booming pet market

Video Credit: Reuters Studio - Duration: 01:59s - Published
Chewy debut gives Wall St. a taste of booming pet market

Chewy debut gives Wall St. a taste of booming pet market

Shares of pet product retailer Chewy soared as much as 87 percent in their first day of trading but finished with a 60 percent surge as Wall Street looks to get a piece of the growing $70 billion U.S. pet market.

Conway G.

Gittens reports.

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It's a $70 billion market in the U.S. and Wall Street wants a piece of it.

Shares of pet products retailer Chewy surged Friday in their market debut, even after the initial public offering priced above the expected range.

A 63 percent opening pop at the New York Stock Exchange gave Chewy an instant market value of more than $14 billion, that's more than five times the price PetSmart paid for the company when it acquired it in 2017.

Chewy is set to benefit from a pet-friendly international trend, says Reuters' Joshua Franklin.

SOUNDBITE (ENGLISH): REUTERS CORRESPONDENT JOSHUA FRANKLIN, SAYING: "There's this pet humanization happening at this moment, where pet owners are increasingly treating their pets like members of their family and spending appropriate amounts of money on them as a result.

And I think, it is a chance, if you look at a macro play, people look at the pet industry as being a little bit recession resistant.

People in a downturn are still going to be spending money on their pets." Even though Chewy is losing millions of dollars a year, investors right now are focused on sales growth.

Revenues surged in 2018 to $3-1/2 billion from just $26 million five years ago.

Investors are betting Chewy can capture more of the market and stand up to some pretty big rivals such as Amazon and General Mills, which bought the Blue Buffalo Pet Products line last year.

SOUNDBITE (ENGLISH): REUTERS CORRESPONDENT JOSHUA FRANKLIN, SAYING: "The key thing that Chewy tries to do is really to take customer service to another level and try to foster customer loyalty and brand loyalty.

They are doing things like sending pet owners who recently lost a pet - sending them bereavement cards, birthday cards for their pets - things like that." But buyers beware, like so many recent IPOs, this one was structured in a way that new investors virtually have little say-so compared to controlling shareholders private equity firm BC Partners and retailer PetSmart.




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