PET CENTER COMÉRCIO E PARTICIPAÇÕES S.A. São Paulo, March 7th, 2024 - Pet Center Comércio e Participações S.A. ("Petz Group" or "Company") (B3: PETZ3) announces its results for the fourth quarter of 2023 (4Q23). It is worth mentioning that the Petz Group results below include the consolidation of (i) Zee.Dog from January 2022 onwards; and (ii) Petix from July 2022 onwards, unless indicated otherwise.
Since 2019, our Financial Statements have been prepared in accordance with IFRS 16. To better represent the current economic reality of the business, the numbers in this report are presented under the previous reporting standard
IAS17/CPC 06. The reconciliation with IFRS 16 in 4Q23 is available on pages 25-27.
- Petz Stores: 246 units¹, with 10 openings in 4Q23 (30 in 2023)
- Petz Group Gross Revenue (GR)2: R$983.8mm; +5.2% y/y
- Petz Standalone Product Gross Revenue: R$860.6mm; +6.0% y/y
- Petz Standalone Digital Gross Revenue (DGR): R$352.6mm; +15.4% y/y; 39.6% of Petz Standalone Gross Revenue (PGR) (+3.5 p.p. y/y)
- Petz Group Gross Profit: R$382.1mm; +4.5% y/y; Gross Margin of 38.8% of PGR (-0.3p.p. y/y and +0.6 p.p. q/q)
- Petz Standalone Gross Profit: R$345.6mm; +3.3% y/y; Gross Margin of 38.8% of PGR (-0.7p.p. y/y and +0.7 p.p. q/q)
- Petz Group Adjusted EBITDA3: R$66.8mm; -3.5%y/y; Adjusted EBITDA Margin of 6.8% of GR (-0.6p.p. y/y)
- Petz Standalone Adjusted EBITDA3: R$59.8mm; -18.8%y/y; Adjusted EBITDA Margin of 6.7% of PGR (-2.0p.p. y/y)
- EBITDA Acquisitions³: R$7.0mm vs. +R$1.7mm in 3Q23 and -R$4.5mm in 4Q22
B3: PETZ3
R$3.99
Per share
462,523,502
Total Shares
R$1.8billion
Market Cap
IRContact
https://ri.petz.com.br/
ri@petz.com.br
+55 (11) 3434-7181
Data as of March 7th, 2024
R$ thousands, | 4Q23 | 4Q22 | Var. | 2023 | 2022 | Var. | ||||||||||
unless otherwise stated | ||||||||||||||||
Financial Results Petz Group | ||||||||||||||||
Total Gross Revenue2 | 983,809 | 934,820 | 5.2% | 3,786,594 | 3,366,845 | 12.5% | ||||||||||
Gross Revenue Petz Standalone | 890,305 | 846,973 | 5.1% | 3,463,972 | 3,084,986 | 12.3% | ||||||||||
Gross Revenue from Acquisitions | 115,017 | 102,004 | 12.8% | 398,119 | 317,466 | 25.4% | ||||||||||
Digital Gross Revenue Petz Standalone | 352,632 | 305,667 | 15.4% | 1,307,516 | 1,054,857 | 24.0% | ||||||||||
Digital Penetration (% PGR) | 39.6% | 36.1% | 3.5p.p. | 37.7% | 34.2% | 3.6p.p. | ||||||||||
Gross Profit | 382,066 | 365,735 | 4.5% | 1,481,789 | 1,352,845 | 9.5% | ||||||||||
% Total Gross Revenue | 38.8% | 39.1% | (0.3p.p) | 39.1% | 40.2% | (1.0p.p) | ||||||||||
Gross Profit Petz Standalone | 345,598 | 334,553 | 3.3% | 1,359,219 | 1,245,161 | 9.2% | ||||||||||
% Gross Revenue Petz Standalone | 38.8% | 39.5% | (0.7p.p) | 39.2% | 40.4% | (1.1p.p) | ||||||||||
Ajusted EBITDA3 | 66,753 | 69,183 | -3.5% | 267,094 | 259,466 | 2.9% | ||||||||||
% Total Gross Revenue | 6.8% | 7.4% | (0.6p.p) | 7.1% | 7.7% | (0.7p.p) | ||||||||||
Ajusted EBITDA Petz Standalone3 | 59,776 | 73,640 | (18.8%) | 264,876 | 271,609 | (2.5%) | ||||||||||
% Gross Revenue Petz Standalone | 6.7% | 8.7% | (2.0p.p) | 7.6% | 8.8% | (1.2p.p) | ||||||||||
Adjusted Net Income4 | 19,428 | 24,899 | (22.0%) | 77,895 | 109,450 | (28.8%) | ||||||||||
% Total Gross Revenue | 2,0% | 2,7% | (0.7 p.p) | 2,1% | 3,3% | (1.2 p.p) | ||||||||||
Indicadores Operacionais Petz Standalone | ||||||||||||||||
Number of Stores1 | 246 | 218 | 28 | 246 | 218 | 28 | ||||||||||
Store Openings | 10 | 18 | (8) | 30 | 50 | (20) | ||||||||||
Footage (m²) 1 | 212,925 | 201,510 | 5.7% | 212,924 | 201,510 | 5.7% | ||||||||||
Seres Veterinary Centers | 127 | 155 | (28) | 127 | 155 | (28) |
1 Considers the closure of Extra Barra da Tijuca unit in 3Q23 and Ayrton Senna unit in 1Q23, both in Rio de Janeiro-RJ. More explanations in the footnote on page 8. 2 Considers the effect of Intercompany Eliminations (details page 9).
3 Does not consider the effect of IFRS 16, in addition to the adjustments explained on page 16.
4 Settings explained on page 18. It does not consider the effect of IFRS 16, therefore it should not be used as a reference for the basis for calculating dividends.
2
3
The year 2023 marked significant achievements and valuable lessons for Petz. Amidst a dynamic environment, we overcame challenges that not only strengthened our resilience and adaptability but also demonstrated the dedication and commitment of the entire team.
Regarding the achievements that further consolidated our leadership position in the market, we highlight the following:
- The diligent integration of acquired companies - a movement that reduced complexity and operational costs via an asset-light structure, bringing significant benefits to margins and greater speed in decision-making.
o Significant progress in Zee.Dog's integration, having achieved by the end of 2023:
- shutdown of the Zee.Dog Kitchen factory, with production outsourcing and better unit cost of the product; and (ii) restructuring of the international vertical, now with an asset-light operation through an exclusive partnership with a local operator (USA) and via distributors only (Europe) vs direct distribution previously. Furthermore, with the systemic integration completed, we increased the number of cities served by Zee.Now and started the closing of 12 hubs (out of the 15 existing ones) - sales that will now be addressed by nearby Petz stores, without changing customer experience, generating a reduction in operational expenses (rent and personnel).
- 30 new stores opened during the period, totaling 246 units in 23 states.
- The new Petz App was launched, consolidating channel and service offerings and improving customer navigation and shopping experience. This version also includes Clubz (Petz's new benefits program) and brings convenience to customers through scheduling grooming and veterinary services (which already represent approximately 60% and 20% of service bookings as of Dec/2023, respectively).
- Petz brand refresh, a strategic move to update our brand. It represents the Company's progress in consolidating its ecosystem of products and services, enhanced by acquisitions.
- Launch of new private label products and categories, representing ~8.5% of gross product revenue in Dec/2023 (+2.1 p.p. y/y). The expansion of the private label portfolio highlights our capacity for innovation and differentiation compared to the competition (specialized or not).
- Advancements in our ESG agenda include conducting our first Greenhouse Gas (GHG) Inventory, our first Annual Sustainability Report and participation in the CDP questionnaire.
Regarding the financial highlights of the year:
- Total Gross Revenue of R$ 3.8 billion, representing a growth of +12% y/y, performance achieved vs. a significant growth base of 36% y/y in 2022.
- In the Digital channel, Gross Revenue amounted to R$ 1.3 billion, a growth of +24% y/y vs. a substantial growth base of +41% y/y in 2022. Digital Penetration reached 37.7%, representing an increase of +3.6 p.p. y/y. Despite the significant advance in online share, we significantly reduced the margin gap between physical and digital channels between 2020 and 2023 by implementing strategic initiatives (such as service fee charging) and operational efficiency in performance marketing, shipping and packaging.
- Strong focus on expenses through firm controls via thematic packages with relevant savings vs. budget in 2023.
- Operational cash generation sufficient to fund our investments - for the first time - reflecting our commitment to expense control and capex discipline, but also a significant improvement in the cash cycle/working capital. Additionally, the Company maintains a solid cash position and low debt levels, even after raising R$400 million in long-termfinancing in 1H23.
Even with the Company's significant achievements throughout the year, we are closely monitoring the scenario in the pet segment, acknowledging short-term challenges. Firstly, we noticed more moderate growth in the sector compared
4
to previous years and lower consumer disposable income. However, our conviction in the long-termprospects remains strong, driven by population growth and the growing trend towards pet humanization, associated with a growing consumption of content and information by the pet owners.
Secondly, we also notice a slightly fiercer competition in 2023, although the dynamics in the sector are not homogeneous, with significant performance variations among categories. For example, we observed that discretionary products - such as accessories - suffered a substantial increase in supply, a category that did not grow y/y in Petz Standalone. On the other hand, recurring and essential categories such as Pharmacy, Hygiene & Cleaning and Food continue to show healthy growth levels.
Despite these factors, we continue to be the undisputed leader in the pet segment - with a slight increase in market
share during the year through our differentiated value proposition and the flexibility/adaptability of our team. Even with this positive result, Petz is not satisfied with growth close to the market average - we are committed to achieving higher levels of growth, in accordance with our history. Therefore, in 2024, we are directing our focus further within the Company, executing internal adjustments and new initiatives to accomplish this objective in a solid, sustainable, and profitable way. We present more details about these opportunities in the following section. It is important to highlight that we are confident about this resumption of sales from the 2H24 onwards through the combination of a more favorable macro scenario with the beginning of the maturation of our internal initiatives.
Last, we continue to be guided by one of our non-negotiable values since our founding: delighting our customers and placing them at the center of all decisions. Our commitment to competitive pricing and exceptional service remains solid without compromising operational efficiency and cost control. This approach and the initiatives we have been working on over the last few months are fundamental to consolidating our leadership position and strengthening our customers' loyalty. With this, we arrived in 2024 with great learnings from the previous year and confident in our strategic positioning and our team's dedication to achieving consistent results.
Sergio Zimerman
5
We remain focused on growing sustainably, improving our profitability, and consolidating our competitive advantages through the following pillars:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
6
Petz Group
R$ thousands, unless otherwise stated
Gross Revenue from Products and Services
Taxes and other Deductions
Net Revenue from Products and Services
Cost of Goods Sold and Services Rendered
Gross Profit
Operating Revenue (Expenses)
Selling
General & Administrative
Other Operating Income (expenses), net
4Q23 | 4Q22 | Change | 2023 | 2022 | Change | |||
983,809 | 934,820 | 5.2% | 3,786,594 | 3,366,845 | 12.5% | |||
(163,219) | (146,798) | 11.2% | (613,353) | (532,311) | 15.2% | |||
820,590 | 788,022 | 4.1% | 3,173,241 | 2,834,534 | 11.9% | |||
(438,524) | (422,287) | 3.8% | (1,691,452) | (1,481,689) | 14.2% | |||
382,066 | 365,735 | 4.5% | 1,481,789 | 1,352,845 | 9.5% | |||
(315,313) | (296,552) | 6.3% | (1,214,695) | (1,093,379) | 11.1% | |||
(239,425) | (212,781) | 12.5% | (888,892) | (787,480) | 12.9% | |||
(71,678) | (77,789) | (7.9%) | (309,235) | (281,249) | 10.0% | |||
(4,210) | (5,982) | (29.6%) | (16,568) | (24,650) | (32.8%) |
Adjusted EBITDA
66,753 69,183 (3.5%)
267,094 | 259,466 | 2.9% |
Non-Recurring Results1 | (7,647) | (6,210) | 23.1% | (16,104) | (15,646) | 2.9% | |
Stock Option Plan2 | (7,300) | (3,070) | 137.8% | (17,310) | (26,819) | (35.5%) | |
Write-off of Fixed Assets | (3,171) | - | - | (3,186) | (235) | 1255.7% | |
Depreciation & Amortization | (43,381) | (37,318) | 16.2% | (165,363) | (127,101) | 30.1% | |
Operating Profit before Financial Income | 5,254 | 22,585 | (76.7%) | 65,131 | 89,665 | (27.4%) | |
Financial Results | 2,313 | 13,022 | (82.2%) | (9,233) | 22,317 | n/a | |
Financial Income | 24,588 | 24,284 | 1.3% | 83,180 | 64,333 | 29.3% | |
Financial Expenses | (22,275) | (11,262) | 97.8% | (92,413) | (42,016) | 119.9% | |
Earnings before Income Tax and Social Contribution | 7,567 | 35,607 | (78.7%) | 55,898 | 111,982 | (50.1%) | |
Income Tax and Social Contribution | (2,416) | (11,869) | (79.6%) | (19,916) | (36,694) | (45.7%) | |
SOP, M&A, Non-Recurring and tax effects | 14,277 | 1,161 | n/a | 41,912 | 34.162 | 22.7% | |
Adjusted Net Income | 19,428 | 24,899 | (22.0%) | 77,895 | 109.450 | (28.8%) | |
EBITDA | 48,635 | 59,903 | (18.8%) | 230,494 | 216,766 | 6.3% | |
Adjusted EBITDA IFRS 163 | 122,425 | 119,447 | 2.5% | 483,852 | 446,087 | 8.5% |
Petz Standalone | 4Q23 | 4Q22 | Change | 2023 | 2022 | Change | |||||||||
R$ thousands, unless otherwise stated | |||||||||||||||
Gross Revenue from Products and Services | 890,305 | 846,973 | 5.1% | 3,463,972 | 3,084,986 | 12.3% | |||||||||
Taxes and other Deductions | (138,265) | (123,080) | 12.3% | (527,196) | (468,864) | 12.4% | |||||||||
Net Revenue from Products and Services | 752,040 | 723,894 | 3.9% | 2,936,776 | 2,616,122 | 12.3% | |||||||||
Cost of Goods Sold and Services Rendered | (406,442) | (389,341) | 4.4% | (1,577,557) | (1,370,961) | 15.1% | |||||||||
Gross Profit | 345,598 | 334,553 | 3.3% | 1,359,219 | 1,245,161 | 9.2% | |||||||||
Operating Revenue (Expenses) | (285,822) | (260,912) | 9.5% | (1,094,343) | (973,552) | 12.4% | |||||||||
Adjusted EBITDA | 59,776 | 73,641 | (18.8%) | 264,876 | 271,610 | (2.5%) |
- Non-recurringeffects explained on page 16.
- Non-casheffect and accounted for from the moment the grants are distributed, taking into account the vesting period of each option. In this sense, it is worth mentioning that most of these expenses refer to the second stock option plan approved at the time of the IPO, and calculated based on the share price in July/August 2021 (~R$ 23/share).
- More information on the Appendix II on page 25.
7
10 stores opened in 4Q23, 5 outside the state of São Paulo and 3 in new cities: Botucatu - SP, Santa Maria - RS, and Divinópolis - MG. We ended the quarter with 52% of units outside São Paulo (compared to 50% in 4Q22).
In 2023, we reached a milestone of 30 openings in 12 states, fulfilling our guidance of opening 30-40 stores for the year. We ended 4Q23 with 246 stores4 in 23 states across the 5 regions of Brazil, strengthening our leadership position as the largest Pet ecosystem in the country in terms of revenue and the number of units and geographic coverage. It's worth noting that about 47% of the stores have not yet completed their third year of operation (with 12% still in their first year), meaning they have yet to reach their full expected potential in revenue and profitability.
Finally, regarding the "Seres" brand, we ended the period with 127 Veterinary Centers, including 15 hospitals - these are present in 11 states.
4 Considers the closure of the Extra Barra da Tijuca and Ayrton Senna units, both in Rio de Janeiro-RJ (further explanations in the 3Q23 and 1Q23 Earnings Release, respectively).
8
R$ thousands,
unless otherwise stated
Gross Revenue Petz Standalone5 Products
Physical Stores
Digital
Services & Others
Gross Revenue from Acquisitions6
Intercompany7
4Q23 | 4Q22 | Change | |||
890,305 | 846,973 | 5.1% | |||
860,559 | 811,628 | 6.0% | |||
507,927 | 505,961 | 0.4% | |||
352,632 | 305,667 | 15.4% | |||
29,746 | 35,345 | (15.8%) | |||
115,017 | 102,004 | 12.8% | |||
(21,514) | (14,158) | - |
2023 | 2022 | Change | ||
3,463,972 | 3,084,986 | 12.3% | ||
3,335,930 | 2,948,026 | 13.2% | ||
2,028,414 | 1,893,169 | 7.1% | ||
1,307,516 | 1,054,857 | 24.0% | ||
128,042 | 136,960 | (6.5%) | ||
398,119 | 317,466 | 25.4% | ||
(75,497) | (35,608) | - |
Gross Revenue Petz Group
983,809 | 934,820 | 5.2% | 3,786,594 | 3,366,845 | 12.5% | |||||||
The Petz Group Gross Revenue includes sales from (i) Petz Standalone: products and services carried out in the physical Petz store network, and also sales of products originating from Petz's digital channels, which consider Omnichannel sales (Pick-up and Ship from Store) and E-commerce (sales shipped directly to the customer from the distribution center); (ii) Zee.Dog: sales of exclusive and third-party products on the Zee.Now App, exclusive products in Zee.Dog Brazil (B2B, physical retail, and E-commerce), in Zee.Dog International (B2B and E-commerce), as well as Zee.Dog Kitchen, the Zee.Dog line of natural pet food (E-commerce and physical retail); and (iii) Petix: sales of exclusive products in Brazil (B2B) and International (B2B and E-commerce).
In 4Q23, Petz Group Gross Revenue was R$983.8 million, an increase of +5.2% y/y, highlighting the performance of Petz Standalone Products (+6.0% y/y). We ended 2023 with Petz Group's Gross Revenue of R$3.8 billion, a growth of
12.5% y/y.
- Includes revenues from Cansei de Ser Gato and Cão Cidadão.
- Includes Zee.Dog's revenue as of January 2022 and Petix as of July 2022.
- Effect of sales of Petix and Zee.Dog products made from this to Petz, to supply Petz's physical stores and digital channels.
9
In 4Q23, Petz Standalone Gross Revenue was R$890.3 million, a growth of 5.1% y/y, vs. a solid comparison basis of +22.0% y/y in 4Q22.
Sales from Petz Standalone in 4Q23 were driven by the product segment (+6.0% y/y), with notable growth in Digital revenue, totaling R$352.6 million, a 15.4% y/y increase. Thus, Digital Penetration over Gross Revenue reached a record level of 39.6%, up by +3.5 p.p. y/y and flat compared to 3Q23 - a result explained in the Digital Performance section of Petz Standalone on page 12.
On the other hand, the Services and Others segment decreased 15.8% y/y, mainly reflecting strategic changes in the services vertical, including adjustments in pricing tables aimed at greater competitiveness, as well as the temporary closure of veterinary clinics and grooming centers during 1Q23 due to network resizing studies. In this regard, it is worth reinforcing our strategic focus on revitalizing services through the optimization of installed capacity and cost control, process review with a focus on customer and service quality, feasibility studies of new models/partnerships (i.e., micro- franchises), and development of health plans.
We ended 2023 with a Gross Revenue from Petz Standalone of R$3.5 billion, a growth of 12.3% compared to the previous year - vs. a comparison base of +24.8% in 2022.
Petz Standalone Same-Store-Sales presented a performance of -1.6% y/y in 4Q23 (vs. +7.1% in 4Q22 and -0.5%in 3Q23) as a result of (i) the challenging macroeconomic scenario in retail and in Brazil; (ii) cooling of internal inflation in the Pet segment; (iii) a decrease in Services revenue; and (iv) the accelerated pace of store expansion. For 2023, SSS was +2.6% (vs. +9.3% in 2022), for the same reasons mentioned above.
8 Excluding stores impacted by the opening of new Petz units in areas of influence and/or in the same city.
10
Attachments
- Original Link
- Original Document
- Permalink
Disclaimer
Pet Center Comercio e Participações SA published this content on 07 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 08 March 2024 00:04:52 UTC.
