Food and consumables represented over 70% of sales and remained strong sales pillars for the company. Most sales (76%) were performed in-store. Online sales accounted for 23% of Musti’s business, a slight increase of 1%.

Operating profit also showed a positive incline of nearly €7 million (€7.6M) to €37.8 million ($41.2M).

The retailer’s Annual Report 2023 points out that the average spend per loyal customer increased to €182.7 (€200) despite the effects of the unfavorable currency exchange rates. A year ago, the average expenditure was slightly lower, €181.5 (€198.9).

The number of loyal customers from October 2022 to September 2023 increased by 6.1% to 1,543 thousand across Finland, Sweden and Norway.

New pet food factory

The complete acquisition of Premium Pet Food Suomi Oy’s pet food plant in Lieto, Finland, earlier in the year is one of the drivers behind these numbers.

According to CEO David Rönnberg, the integration of the new factory is going “very well.”

“The benefits, both financial and operational, are already visible. The investment in the factory has strengthened our commitment to sustainably produced products and will be a key success driver going forward,” he says.

Musti believes that the investment in the factory has strengthened their commitment to sustainably produced products and “will be a key success driver going forward.”

Potential acquisition

After Portuguese multinational Sonae entered a bid of €868 million ($947M) to take over the Finnish company, a consortium has been formed for the voluntary recommended public cash tender offer of all outstanding shares in Musti Group.

The offer price is €26 ($28.3) cash settled for each share validly accepted during the offer. Musti’s Board of Directors has unanimously decided to recommend that the company’s shareholders accept the tender.

The offer period began on 18 December 2023 and will expire on 5 February 2024 unless there is an extension.

The company told investors it plans to open between 4 and 8 new practices by the end of next year.

The practices will be supplemented with Chewy’s custom-built open platform, which can be applied both to Chewy Vet Care and third-party partner practices. According to Mita Malhotra, President of Chewy Health, expanding into veterinary care is a “natural step” in Chewy’s evolution.

Chewy Vet Care is another addition to Chewy’s pet health portfolio, which includes Connect with a Vet, a pet pharmacy and tele-triage service, and CarePlus, an insurance branch.

$3 billion

The announcement comes just a few months after retailer giant Walmart announced the opening of a new pet service center in Georgia.

According to the latest figures, Chewy Health made over $3 billion (€2.7B) between Q3 2022 and Q3 2023. Internal research conducted by the retailer suggests that 50% of US pet parents would “definitely” or “probably” want to switch to Chewy Vet Care clinics if presented with this service.

Warning for unapproved animal antibiotics

Chewy has also come under fire recently as it received a warning from the U.S. Food and Drug Administration (FDA) for selling products containing unapproved antibiotics and other antimicrobial drugs for animals, such as penicillin and amoxicillin.

The FDA warns that these could potentially “contribute to the development of antimicrobial resistance, which affects both human and animal health.”

The retailer has been granted until the end of the year to state how they will address the violations, failure to which may result in the regulator taking legal action, which may include product seizure or a court order to stop the distribution of unapproved products.

Officials concluded that it is unlikely for Woolworths, Australia’s largest retail group, to leverage its retail position into the specialty pet industry in an anti-competitive way.

“Market feedback indicated that specialty pet retail and grocery are distinct channels in the pet industry, and specialty pet retail stores have a very different product and service offering to supermarkets and discount department stores,” says the ACCC’s Chair Gina Cass-Gottlieb.

The ACCC accepted the pet retailer’s proposal to divest 41 specialty pet retail stores, 25 co-located veterinary hospitals, 4 brands and 2 online retail stores to Woolworths’ portfolio.

Petstock is Australia’s second-largest specialty pet retailer, with over 270 stores.

The investigation

The ACCC launched an investigation earlier this year after voicing concerns about the negative impact of the operation valued at AU$586 million ($392M) and some acquisitions by Petstock that the competition authority was not notified of.

Smaller competitors were concerned that this purchase would enable the retail giant to leverage its buyer power into pressuring suppliers to stock key specialty products in its supermarkets. The ACCC points out that most suppliers who supply both Woolworths and Petstock were not concerned.

Australian law firm Clayton Utz says the ACCC’s decision to “publicly investigate Petstock’s historical acquisitions of competitor stores” is “rare.”

The company explained that the move signals a “more interventionist approach to merger clearances by the ACCC, which is advocating for merger reform, including mandatory notification.”

A new app

Arcaplanet took its relationship with its customers to the next level by implementing a new smartphone app when the online channel was growing.

The new tool aims to become an “inseparable companion for pet owners,” the company says. The objective is that the app allows customers to make purchases online (and re-order past ones) but also use the Arcacard customer loyalty scheme and receive coupons and personalized offers.

“The new app will allow the customer to not only purchase products on our e-commerce platform but also use the discount coupons in-store. Our loyalty program will become digital—we will no longer distribute plastic cards,” said Arcaplanet CEO Nicolò Galante in a recent interview with GlobalPETS.

Business and consulting firm Casaleggio Associati concluded that Arcaplanet was the most popular Italian e-commerce platform in November 2023, just after Zooplus.

In 2022, the company’s e-commerce business accounted for €40 million ($43.8M) of Arcaplanet’s revenue. This was 50% more than the previous year.

More stores

Despite online playing an important role in Arcaplanet’s ecosystem, the Italian pet retailer still holds in-store as its top priority.

2023 will end with 52 more stores than last year, bringing the total amount to 553. They also aim to increase their pet specialists to 2,900 by the end of the year.

“As always, in-store pet specialists are at the center of customer service, and the company is aiming for ever-increasing countrywide coverage to be closer to customers,” says the retailer.

Stores will also play an important role in 2024 when it comes to services as the company plans to expand its pet wash services from the current 82 locations to 100 next year.

The retailer will end 2023 with 300 new jobs and aims to add an additional 300 next year.

Pet insurance and vet business

Nicolò Galante admitted a few months ago to GlobalPETS that it was “a big opportunity” for the retailer to tap into the premium segment despite acknowledging that the approach to healthcare by Italian pet parents is still “extremely reactive.”

The Italian retailer acquired 3 veterinary practices in October, 2 of which were from the Happy Friends brand and one from Mypetclinic.

This year, Arcaplanet also launched an insurance scheme working with insurance firm ConTe.it.

Sustainability 

In 2023, Arcaplanet undertook a process to reduce its environmental emissions by around 50%, including the use of renewables. According to the company, 80% of their energy needs are fulfilled thanks to this kind of energy.

Next year will be dedicated to the circular economy, with the target to transition over 60% of its private-label dry food brands into recycled and recyclable packaging.

This year, the retailer tested a “new generation” of stores featuring reduced environmental impact and reduced energy consumption and forecasts to expand this concept to the entire network in the first part of 2024.

On the other hand, the company achieved a net loss of $35.8 million from a profit of $2.3 million (€2.1M) in the previous year.

Chewy also revealed its 9-month earnings, reaching net sales of $8.3 billion (€7.7B), up from $7.39 billion (€6.86B) during the same period in 2022.

Net income was much higher over the 9 months this year at $5.3 million (€4.9M) compared to the $43 million (€39.9M) last year.

Canada and Black Friday

After announcing its international expansion to Canada in June, the Florida-based online pet retailer confirmed that initial customer demand “has been strong” and that the sign-ups for recurrent orders (Autoship) are “healthy.”

Chewy started operations in Toronto, the largest metropolitan area in Canada, and plans “to take a gradual and responsible approach to expanding [their] footprint.”

The company also stressed that shopping events like Black Friday are a considerable opportunity for businesses like Chewy. According to the online pet retailer, this year’s event was a success, as traffic and sales exceeded expectations across all categories.

Yearly guidance

Chewy has reviewed its full-year guidance to fall between $11.08 billion and $11.1 billion (€10.29B–€10.3B). Previously, the retailer had forecasted $11.15 billion to $11.35 billion (€10.35B–€10.54B).

“While we are confident in our ability to continue gaining market share and deliver attractive levels of profitability, our guidance reflects the continued macro pressures observed industrywide,” reads a letter to shareholders.

Analysts from Market Watch noted that shares in the company dipped by 8% after the earnings announcement and said that this year, there has been a huge decline of 48% in shares.

Leadership changes

David Reeder, currently the CFO at semiconductor multinational GlobalFoundries, will take on the role of Chewy’s new Chief Financial Officer (CFO) in early 2024. Current interim CFO Stacy Bowman will serve as Chief Accounting Officer.

CEO Sumit Singh said that Reeder is a “highly experienced” finance executive who has driven strong results across a range of complex industries.

Although he does not come from a pet background, Reeder has experience leading financial strategy and is well versed in the insurance industry, as he was CEO of Florida-based Tower Hill Insurance Group.

The Times published that the PE firm is working together with financial advisors at Houlihan Lokey, a global investment bank with expertise in mergers and acquisitions.

In a conversation with GlobalPETS, a spokesperson at Jollyes said that the company can’t comment on the market. “Jollyes is a successful and rapidly expanding UK pet superstore ambitious for further growth,” they added.

The rumors come a few days after the pet retailer released its earnings for the 6 months to 27 November 2023, where it hit total sales of £70 million ($88M/€81.7M). This is a 31% increase compared to the same period in 2022.

Like-for-like sales were also up by 19% compared to the previous year.

During the 6-month period, 8 new stores were opened. Earlier in the year, the pet retailer said it was on track to open its 100th store in 2023.

Jollyes was recently awarded by the Pet Industry Federation (PIF) as the Pet Retailer of the Year.

The multinational, which owns one of the leading Portuguese food retail markets, MC, wants to internationalize its retail portfolio and reinforce its presence in the “rapidly growing” pet care retail sector.

“The Consortium intends to initiate the next development phase of Musti by further enhancing its value, proposing and catering to the needs of an increasing number of pet parents,” reads a statement issued by Sonae.

Musti’s Board of Directors has unanimously recommended that the company’s shareholders accept the tender.

The offer is set to expire on February 12 and is expected to be completed during the first quarter of 2024, pending approval from competition authorities.

On the day of the announcement, Sonae shares were down 0.5% on the Euronext Lisbon market. However, Musti shares shot up almost 29%.

A profound belief

According to Reuters, Sonae had already bought Musti shares in recent months and owned a minority stake before the tender.

“The offer, which represents a premium valuation, reflects our profound belief in the company, the pet retail industry and the Nordic region, as well as in the strong and experienced management team of Musti,” says Claudia Azevedo, CEO of Sonae.

David Rönnberg, Musti’s Chief Executive Officer, shared his excitement about the “next chapter” of the retailer’s journey. He added that the next development phase “will need to be supported by further investments and a different capital structure.”

The Helsinki-headquartered pet retailer posted €425.7 million ($454.8M) in revenue in the 9 months to September 2023, an increase of 8.9%.

Sonae hit €6 billion ($6.5B) in turnover in the first 9 months of 2023, 10.4% more than during the same period in 2022. The multinational company is present in 90 countries and operates in various sectors, including retail, real estate and financial services.

New Zealand distributor, wholesaler and marketer of healthcare products EBOS Group had bid AU$3.75 billion ($2.4B/€2.2B) for the business. However, the company has confirmed to GlobalPETS that the transaction will not move forward after engaging in discussions regarding the “potential strategic transaction.”

“These discussions have now concluded, and a transaction will not proceed,” a spokesperson says.

Reuters reported that the sale did not go through because there was a weak demand from EBOS investors to fund the substantial capital raising of AU$2 billion ($1.3B/€1.2B).

Market reaction

EBOS’ shares slumped by 7% after the news came out that the company was interested in buying Greencross. Reuters wrote that EBOS’ stock was to sell at a 12% discount. The news outlet stated that the significant discount in the market would have been highly dilutive to its investors.

Amid the complications, the medical and pharma product distributor was put under a trading hold because of the weaker-than-expected demand from its investors.

This is the second time in recent months that the sale of Greencross has fallen through. Earlier in September, Australian conglomerate Wesfarmers was exploring taking over the company.

Local media pointed out that the deal was being seriously considered, but it did not come to fruition in the end.

Italian pet retailer Arcaplanet is in second place, followed by Bauzar—an e-commerce platform for pet food and accessories—and retail chain Isola dei Tesori.

Robinson Pet Shop, a pet store chain from Emilia-Romagna, is in fifth place. Munich-based Bitidiba and Italian pet pharmacy CentroVete are in positions 6 and 7, respectively.

Torino-based e-commerce platform Paco Pet Shop, the direct-to-consumer (DTC) website from pet food manufacturer Purina and QuattroZampe Shop, closes out the list.

Casaleggio Associati analyzed 5,409 e-commerce websites, 102 from the pet sector.

This references an upcoming regulation on imports of goods from countries outside the UK, including the EU. TOM categorizes products under three risk categories – high, medium and low -, each needing different documentation to import products into Great Britain.

EU countries exporting animal by-products (ABP) for the manufacture of pet food, dog chews, flavoring and frozen and raw pet food fall under medium risk, while processed and canned pet food falls under low risk. For non-EU countries, all categories of pet food and ABP imports from permitted countries fall under medium risk.

“Since the beginning of 2021, UK pet food manufacturers have faced the full reach of EU controls on exported products, whilst the EU has enjoyed continued, easy access to the UK marketplace,” says to GlobalPETS Donna Holland, UK Pet Food’s Technical and Regulatory Affairs Manager.

According to Holland, this is the “biggest change” to UK import rules since Brexit became into force.

Tax on each pet food consignment

UK Pet Food confirms that a “Common User Charge” between £20–£43 ($24–$53/€23–€50) will be levied on each consignment of pet food arriving in the UK. This charge is intended to recover the costs of Border Control Posts (BCPs).

The potential cost impact is yet to be known, and the government has been consulting on methodology and rates.

UK Pet Food informed that the government is proposing a “trusted trader approach” to reduce controls further and move toward electronic phytosanitary certificates for regulated plants and plant products to keep costs down, speed up the process and reduce fraud.

More checks and certificates

Low-risk consignments will not require health certification or routine physical checks, but medium-risk imports will require pre-notification, health certificates for non-EU-origin imports, and document checks by 31 January 2024. They may be liable to identity and physical checks at the border as well.

The second phase of controls – extending the checks for EU-origin products – will come into force by 30 April 2024. Safety and security declarations for EU imports will come into force from 31 October 2024.