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Revenue (2021) $776 million

Profit (2021) $98.8 million

14-month share price gain 26.4%

P/E ratio (trailing) 24

Watching your fur pal snoozing in a corner, you may not realize pet-supply retailing roared into higher gear during the pandemic. And as Pet Valu CEO Richard Maltsbarger explains, his company is now No. 1 in Canada, yet still has plenty of room to grow.

Over the past three years, Pet Valu’s market share has surged to 18%. It has deftly skated past PetSmart and Walmart, which both have double-digit market share, and several big and small retailers in single digits, including supermarkets and the Mondou and Ren’s Pets chains.

Maltsbarger says two big factors are fuelling growth. First, since early 2020, “we’ve seen more than three million pet adoptions across Canada,” bringing the total population to more than 25 million. Second, pet-companion owners are getting, well, sappier. Maltsbarger says Pet Valu targets the “devoted pet lover” for whom a pet is a family member. In the case of food, that means “frozen, raw, gently cooked and gently baked, much like the organic and other trends that you see in people food.”

Backing up Pet Valu’s strategy are hard numbers. The company had 633 outlets across Canada at the end of 2021, about two-thirds franchises, and is aiming to reach more than 1,200 over the next 15 to 20 years. Maltsbarger, an MBA from Missouri who’s been CEO since 2018, says the target came from “a nationwide machine-learning optimization algorithm,” based on demographic, cellphone and other data, that identifies opportunities.

In the past, some growth was by acquisition, including buying the 66-store Chico chain earlier this year to establish Pet Valu in Quebec. But now Pet Valu is a coast-to-coast business. Future growth will largely come from opening 35 to 45 new outlets this year, and about the same in future—almost all franchises—and by improving logistics and in-store sales.

To that end, there’s an automation push. “When I got here, we were still using clipboards in the warehouse. And our loyalty program was on paper cards under the cash registers,” Maltsbarger says.

Financially, the pandemic was also a boon. Pet Valu had been wholly owned by Atlanta-based Roark Capital Group, but it completed a $316-million IPO on the Toronto Stock Exchange in June 2021. Roark also sold some Pet Valu shares last year but still owns 62%.

The IPO proceeds helped Pet Valu nearly halve its long-term debt, which is now $342 million. “We’re one of the really good investment stories where you actually have a high-growth top- and bottom-line company, with a solid balance sheet and self-funded growth,” Maltsbarger says.

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