Pet owners pampering animals in the case of food, despite inflationary pressures

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A customer carries a dog near a Petco Animal Supplies shopping bag outside a store in Latest York.

Angus Mordant | Bloomberg | Getty Images

Pet owners might feel squeezed by inflation, but they’re still pampering their animals in the case of food.

This week, pet products retailer Chewy said it is not seeing any significant trade down amongst shoppers in pet food. Rival pet retailer Petco made similar remarks last week, though each noted a pullback in spending on products similar to leashes and toys.

The comments are in keeping with the trend of pet owners increasingly spoiling their cats and dogs with foods which might be more just like the dishes they’d feed themselves or other relations. To capitalize on the continuing shift, Petco recently partnered with snack bar maker Clif to sell a version for pets. It also launched a line of frozen, human-grade meals for dogs.

“Pet parents are driving one in every of the largest trends the pet industry has seen as they increasingly search out fresh, human-grade food for all family members,” Petco CEO Ron Coughlin said in a release. 

Coughlin said the growing “humanization” of animal companions is being led by Gen Z and Millennial consumers who’re “hyper focused” on their pets’ health and wellness.

Along with more premium foods, Chewy and Petco see their health services and products as a option to higher compete with the low-price offerings from retailers similar to Amazon and Walmart. Earlier this month, Chewy expanded its health offerings with CarePlus, a line of pet wellness and insurance offerings.

For its second quarter, Chewy said net sales rose 12.8% from a 12 months ago to $2.43 billion as shoppers shifted toward more fresh and premium food products. Petco said its sales rose 3.2% to $1.48 billion and reported an analogous shift.

Still, the pet category is not shielded from the soaring inflation that is pressuring consumers. 

Each Petco and Chewy reported softening demand in products similar to crates, beds, leashes and toys over the summer months. Chewy noted that such items do not have to get replaced as often as another items, and that shoppers are opting to skip on them as prices rise.

Chewy said the downturn in such products is temporary and that it expects demand will recuperate. Brian LaRose, Petco’s chief financial officer, also said orders for the products “are delayed, not canceled.”

Still, each corporations tightened their full-year guidance, partly due to the softened demand. Each corporations lowered their revenue guidance for the 12 months. Petco said it now expects adjusted earnings per share of 77 to 81 cents. It previously forecast 97 cents to $1.

Petco’s shares are down down around 24% 12 months so far, while Chewy’s stock is down around 41%.