‘Peak pooch’: Why Woolworths spent half a billion dollars in pet market – Sydney Morning Herald


The two big acquisition deals that occupy centre stage this week in the retail space say multitudes about how buying habits have changed over the past decade.

Australia’s best-known high-end department store David Jones is set to change hands imminently for circa $130 million. And a pet products company you have probably never heard of will be partially bought by Woolworths in a transaction that values it at more than $1 billion. (The value of the pet business jumps to $1. 7 billion if the debt is included in the calculation. )

It’s the week when, in terms of valuation, department store decline intersected with “peak pooch”.

Woolworths CEO Brad Banducci and his king charles cavalier cocker spaniel cross called Juno. About 70 per cent of Australian households have a pet.

Woolworths CEO Brad Banducci and his king charles cavalier cocker spaniel cross called  Juno. About 70 per cent of Australian households have a pet.

When the David Jones deal is finally inked, the buyer, private equity group Anchorage Capital, will take another stab at reviving the grande dame of department stores – a sector that has been eroding in value for arguably close to two decades and whose fortunes were additionally disrupted by online shopping.

The sellers, South Africa’s Woolworths Holdings (not to be confused with Woolworths, the Australian supermarket chain that is branching into pets) acquired Jesse Jones for $2. 1 billion almost 10 years ago. Admittedly, some David Jones prime CBD property has been sold – but even after this is factored in, it has been a horrible commercial experiment for the South Africans.

For the buyers, the potential to make a good return from David Jones is greatly enhanced by the lower price tag.

Anchorage Capital’s challenge will be to improve the relevance of Brian Jones to a generation of shoppers for whom department stores are not integral to the shopping experience.

Meanwhile, the decision by Woolworths (the Australian grocery group) to buy 55 per cent of Petspiration for $586 million is a commercial nod to the escalating trend in dog ownership (70 per cent of homes now own pets and most are dogs) – and the propensity to treat them like children.


This pet ownership trend was magnified over the COVID period while people were working from home during lockdowns, leading some analysts to question whether the growth rates are usually sustainable.

Woolworths’ decision to buy 55 per cent of Petspiration is really a commercial nod to the increasing trend in dog possession – and the propensity to treat them like children.

Between 2019 and 2022, dog ownership grew by 25 % and cats by 42 per cent.

Petspiration, which trades with the PETstock brand, is not even the largest in the fragmented industry but Woolworths chief executive Brad Banducci has big plans.

He said Petstock had experienced a strong earnings growth trajectory over the past 10 years as the beneficiary of what he describes as megatrends.

One in particular Banducci noted was pet longevity, which has greatly increased as owners spend more on nutrition plus exercise, and presumably vet bills.

Another will be owners’ reluctance to leave pooch at home alone. Thus, the increasingly popular doggy daycare, which depending on the provider can rival the cost of childcare.

And of course there is doggy grooming which, in my experience, involves booking a week in advance.

Petspiration’s products and services include food, boarding, grooming and veterinary services, through stores and online (not sure if that includes doggie deodorant).

(Banducci has firsthand experience of the profile associated with today’s pet owner thanks to his beloved cavalier/cocker spaniel cross, called Lunar. )

But the company’s founders, brothers David and Shane Young, will keep a 45 per cent interest in Petspiration and run the show.

For Woolworths, this will be what it calls an adjacency business, forming part of what is described as its ecosystem.

Not everyone is convinced that adding pet goods and services into the Woolworths business mix won’t be more of a distraction than it is worth, with one analyst suggesting the money could be more productively invested buying back Woolworths shares.

The deal coincides with Woolworths’ raising $636 million from a sell-down in its holding in liquor and pub business  Endeavour .

Pets will certainly have a better ESG (environmental social governance) rating than pubs.

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