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Pet Food IPO Chewy May Put Amazon On Its Heels

16 June 2019

PetSmart's online retailer Chewy priced its initial public offering (IPO) at $22 a share, higher than its target, ahead of trading scheduled to start later Friday. It's one of only 10 IPOs for online product retailers globally to exceed $1 billion, a group that includes the 2014 Alibaba Group Holding Ltd. $25 billion listing, the largest-ever.

Over the past eight years, Chewy's net sales grew from $2 million to more than $3.5 billion, including a almost 68 percent increase from FY17 ($2.1 billion) to FY18 ($3.5 billion).

Ryan Cohen, fellow benefactor of the recently open online pet-item retailer Chewy, said empathy goes far in the realm of retail, and that is the thing that surrenders Chewy a leg on Amazon (AMZN) and other web based business destinations.

Chewy had set a price range of $19 to $21 per share, which was raised earlier this week from $17 to $19 per share.

For 2018, Chewy reported net sales of $3.53 billion, up about 68% from $2.104 billion in 2017. The IPO values Chewy at nearly three times the $3.35 billion PetSmart paid for the company.

Americans spent more than $72 billion on their pets past year, with Chewy's 31% of USA online sales surpassed only by Amazon.com Inc.'s 55% share, according to the American Pet Products Association. Spending on pet products and services is projected to continue its historically consistent growth at a 4.2-percent CAGR from 2017 to 2022, the company said, citing Packaged Facts.

PetSmart remains the majority owner of Chewy, with a 70% stake in the company and 77% controlling interest.

"There's still lots of penetration and growth to be had just within the USA market, there's continuing to expand internationally", Cohen said earlier this week.

This relatively small amount of fundraising, however, has some market observers thinking Chewy isn't in the IPO game for money.

Morgan Stanley, JPMorgan, Allen & Co and Bank of America Merrill Lynch led the 12-member underwriting team.

It's not everyday that the New York Stock Exchange (NYSE) allows dogs on the trading floor.

Pet Food IPO Chewy May Put Amazon On Its Heels