Shares of Petco (WOOF) and Chewy (CHWY) are under pressure on Wednesday after Walmart (WMT) announced the opening of its first-ever Pet Services center, offering routine veterinary care, grooming and a self-serve dog wash.
PET SERVICES CENTER: Walmart said it is opening the first-ever Walmart Pet Services center in Dallas, Georgia. "We know that pet services are essential for pet parents, but for many, the experience can be costly and disjointed. At Walmart, we have an opportunity to help our customers save precious money, time and effort by offering a destination for pet services at the same place they purchase their pet food and supplies," the company said.
Walmart Pet Services in Dallas, Georgia will offer "low, transparent pricing for key pet services" in a central location within a dedicated storefront. Services will be offered at "Walmart's Every Day Low Prices," the company notes, including routine veterinary care - vaccines, wellness exams and minor medical services -, grooming and a self-serve dog wash. All services will be provided by qualified veterinary and grooming professionals in collaboration with PetIQ, so customers can rest assured their furry friends will receive high quality care provided by trusted professionals.
The Walmart Pet Services center in Dallas, Georgia will serve as a pilot where Walmart expects to learn how best to work with collaborators and optimize services to deliver on quality, affordability and accessibility. The company says the goal is "to bring the Walmart Pet Services model to other communities we serve in the future."
Walmart currently offers in-store vet clinics on-site in over 65 stores across the country, owned and operated by PetIQ, and all Walmart pharmacies stock the top pet medications so customers can pick up their pet's prescription while shopping in-store. The company also announced that a new online Pet Pharmacy experience is coming soon to Walmart.com and the Walmart app.
WHAT'S NOTABLE: Oppenheimer downgraded Chewy on Wednesday to Perform from Outperform without a price target. The firm expects a more challenging backdrop for Chewy to persist for at least a few more quarters, amid recent signs of weakness in the historically resilient pet food category and the potential for more muted inflation benefits in fiscal 2024. In addition, the current higher interest rate backdrop represents another pressure point for shares, Oppenheimer told investors in a research note. The firm has a favorable view of Chewy's longer-term prospects, but awaits definitive signs of progress on net additions and a potential reset of Street numbers.
PRICE ACTION: In Wednesday trading, shares of Chewy have dropped more than 4% to $18.63, while Petco's shares have slipped almost 3% to $18.63.