Petco Health and Wellness Company, Inc.

Good day and welcome to the Petco second quarter 2024 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, please press star then two. If you do not hear the tone after pressing star one, please hang up and dial back into the call. Please note this event is being recorded. I would now like to turn the conference over to Benjamin T. O. Long. Please go ahead.

Good afternoon, and thank you for joining Petco's second quarter 2024 earnings conference call. In addition, on today's call, we will refer to certain non-GAAP financial measures. Reconciliations of those measures can be found in our earnings release, presentation, and SEC filings. And finally, during the Q&A portion of today's call, we ask that you please keep to one question and one follow-up. With that, let me turn it over to Joel.

Good afternoon, everyone, and thank you for joining us today. I could not be more excited to lead Petco through this pivotal time for the company and shape the next chapter of its extraordinary mission-driven approach of improving the lives of pets and pet parents. First, on behalf of the Petco Board, I'd like to thank Mike Mohan for stepping in as interim CEO and for his tireless work to stabilize our operations and drive continued improvements in performance over the last six months. His passion for our business, his focus on strengthening our retail fundamentals, and his work to realign our cost structure has set us on a path for improved profitability. We will continue to build on this going forward. Before giving a brief overview of our priorities for the remainder of the year, I'd like to spend a few moments on why I came to Petco. I believe in Petco's deep-rooted mission to improve lives for pets and their parents. Pets have always been a central part of my life. Having grown up with dogs and seeing my children do the same, I've experienced firsthand the immense joy pets bring to a family, including mine. Today, Petco is an incredible brand which sits at a critical juncture. While we maintain a differentiated proposition within the resilient pet category, a category which is expected to reach $200 billion in sales within five years, there are clear opportunities to significantly improve our operating and financial performance. Specifically, there are three things about Petco that excite me. Number one, our integrated store and digital footprint, which if positioned effectively, can create an incredible customer experience brought to life across multiple channels. My initial visits have already exposed me to some of the most knowledgeable and enthusiastic people I've met in retail. I must say our partners in the pet care centers truly care about our customers' pets. I've been impressed. Number two, delivering a differentiated offering that can bring and make Petco a destination for pets and pet parents. It's a truism I've seen through my decades in retail that if we present our customers with unique and trend-right product, we'll accelerate our return to retail excellence, meeting pet parent needs and getting back to the heart and soul of pet parenting. Number three, our breadth of services offering, including our VET platform. This is our biggest competitive distinction from online only and mass players and has the potential to power our business as a significant long-term growth driver. In addition to these three, I also want to share my observations my first few weeks at Petco. I believe in and I'm fully committed to what the team and the board have been working on over the last six months and the path it is set for us to continue. I also believe as we maintain this disciplined and holistic approach to retail execution and do so with a focus on fewer and clearer priorities, we can better leverage Petco's unique strengths. In doing so, will not only capture greater share of the category that we currently command, but deliver tangible and sustained profit improvement and significant long-term shareholder value. Simply put, I love pets and I love retail. And although I've only been at Petco a very short while, I'm filled with optimism for the opportunities we have to reestablish trust in our financial discipline and grow the Petco brand. Before I hand it over to Brian to review the quarter, I wanted to share how we're approaching the rest of this year. Our top priority is to improve profitability, focusing specifically on things that will have the greatest impact to our business. The entire company is aligned on four key initiatives, namely, number one, returning to retail fundamentals. Number two, meeting and exceeding customer expectations. Number three, capturing market share through improved basket. And number four, delivering meaningful improvement to the bottom line through a disciplined approach to costs. If the first half of this year was about setting the trajectory of our transformation, the back half is about executing against it and setting the stage for future profitable growth. Let me be clear on where we are today. We are not starting over. I'll be working hand in hand with the leadership team to build on the momentum of the last six months and move with urgency to fix what needs fixing at the foundational level for our long-term success. In doing so, we'll be working diligently and with speed to provide that every part of our business is operating efficiently and effectively delivering meaningful near-term improvements to cash flow and enhanced EBITDA performance. Moreover, our approach will embed these changes into the DNA of how we operate every day, delivering accretive run rate savings in fiscal 2025 and setting a solid financial and operating foundation to facilitate Petco's return to profitable growth.