All types of stores have been facing financial struggles this year. Retailers like Bed, Bath & Beyond, Tuesday Morning and Christmas Tree Shops had to declare bankruptcy and shutter all locations, while Sears, CVS and Walgreens have closed stores as a cost-cutting measure. Fast food restaurants like Burger King, Pizza Hut and Boston Market have done the same. The issues are also facing a national pet store chain - Petco - which according to experts is at an elevated risk of bankruptcy.
The credit reporting agency CreditRiskMonitor assesses a company and assigns them a score that predicts their likelihood of bankruptcy in the next 12 months. After looking at Petco's sales, they gave the pet company a 2, the second-worst rating possible with nearly a 10 percent chance they'll need to declare bankruptcy in the next year. The scores have a 96% accuracy rate.
So what's wrong with Petco? Well during the pandemic, the chain did very well, seeing double-digit sales increases in 2020 and 2021 as more households got pets. Things have changed though, and the sales aren't what they used to be. The company has $1.7 billion in long-term debt, so most of their profits go to paying that off. While they aren't able to make too much money, they are consistently chipping way at their debt, which might keep them from bankruptcy. However, like other retailers, Petco might need to close locations to help free up more cash. No word yet on if that is in the cards for any of their 1,500 stores.