Author: Lauren Hirsch
- Chewy.com, the online pet product retailer owned by PetSmart, filed documents with regulators on Monday to prepare for an initial public offering.
- PetSmart acquired Chewy in 2017 for roughly $3 billion to add an online business to complement its store base, as trends shifted online.
- Chewy reported a net loss of $268 million on sales of $3.5 billion for fiscal 2018.
Chewy.com, the online pet product retailer owned by PetSmart, filed documents with regulators on Monday to prepare for an initial public offering.
Chewy reported $3.5 billion in sales for fiscal 2018, up from $2.1 billion in 2017. For the same period, it reported a net loss of $268 million, narrowing from a net loss of $338 million.
Chewy did not state how much it expects to raise in the offering. Previous estimates have pegged its valuation at between $4.15 billion and $4.75 billion, according S&P Global Ratings.
PetSmart acquired Chewy in 2017 for roughly $3 billion to add an online business to complement its store base, as trends shifted online. But as the two business lines diverged, PetSmart transferred part of its stake in Chewy in a move that set the groundwork for a potential IPO.
The equity transfer sparked a lawsuit from some of the company’s lenders, which PetSmart settled earlier this month.
Following the IPO, PetSmart will remain majority owner of Chewy. It will use proceeds from the IPO for working capital and general corporate purposes, according to the filing.
Chewy was founded in 2011 by Ryan Cohen and Michael Day. It has distinguished itself from many of its competitors with customer service that includes 24/7 access and two-day shipping of online orders.
Since its sale to PetSmart, Chewy has expanded its private label and launched “Chewy Pharmacy,” an online pet pharmacy.
Cohen last year stepped down as CEO of the company. He was succeeded by Sumit Singh, formerly Chewy’s chief operating officer, who previously served as director of Amazon Fresh and worked for Dell.
Chewy joins a long list of unprofitable companies that have either filed for or are planning IPOs, including Uber, Pinterest and SurveyMonkey. Last October, the percentage of unprofitable U.S. companies that went public reached 83%, topping numbers seen even in the dot-com bubble.
As a pet retailer, Chewy’s IPO plans sparked jokes Monday afternoon on Twitter referencing one of the most famous unprofitable victims of the dot-com frenzy − Pets.com.