American Pet
Products Association (APPA) data forecasts that Americans will spend upwards of
$62.75 billion on their pets this year (http://dtn.fm/n76B4), with the supplies
segment continuing to rank a close third, just behind veterinary care and food,
at around 23.8 percent of the pie. With nearly 163 million cats and dogs alone
occupying households and hearts throughout this great country, the
consolidative forces within the pet supply industry that sparked merger talks
between the two biggest players recently, privately-owned (CVC Capital Partners
and the Canada Pension Plan Investment Board) PETCO and PetSmart, are quite easy
to understand. There is a massive, steadily growing market out there to be
tapped and the domestic pet store industry, which has grown to some $18.5
billion in revenues as of this year and which is on track to grow by just over
three percent per annum through 2021, has become fiercely contested territory.
The aforementioned
merger talks may have collapsed under the pressure of scrutiny from U.S.
antitrust regulatory authorities, but that collapse merely set the stage for
the $8.7 billion leveraged buyout of PetSmart (again via private equity, this
time led by BC Partners). Any savvy investor can smell the opportunity here,
especially for what an IBIS World report out earlier this year explained as the
hottest segment moving forward: premium products and services. Another recent
report, this time by Packaged Facts from late 2015, sees the overall pet
industry growing to nearly $92 billion in sales by 2019, and affirms the
general consensus about high-income households being a major demographic for
pet product brands.
Little surprise then
in all of this market momentum that innovative developer of high-quality,
super-premium pet toys and accessories, OurPet’s Company (OTCQX: OPCO) has
continued to wow investors with its bottom line performance metrics. A combination
of ingenious product development/design, guided by a deep management bench of
industry veterans, and pitch-perfect product execution when it comes to the
interests of its core markets, has collectively buoyed the company’s net income
and revenue performance. Amid boisterous consumer activity, as people continue
to respond strongly with positive feedback to the company’s newest designs,
OPCO’s raw financial performance has climbed to levels surpassing even the
company’s own previous YOY records set in Q4 2015 (ended December 31). For Q1
2016 (ended March 31), OPCO posted handsome net revenue gains of 10.3 percent
compared to Q1 2015, and a whopping 24.7 percent increase in net income over
the same interval.
Primary driving
force behind the company’s ever-growing portfolio of lovingly engineered pet
products, Dr. Steve Tsengas, was keen to point out the company’s marketing
efficacy at the time of the Q1 financials release. Noting in particular how
good for business the Q1 kick-off every year of OPCO’s newest offerings was,
done via the widely-attended international trade show presented by the APPA and
Pet Industry Distributors Association in Orlando, Florida, known as the Global
Pet Expo. Dr. Tsengas’s multi-decade quest to bring the power of his vast
experience in holistic, integrated and naturopathic health to the development
of high-end, signature pet brands, is really starting to pay off for
shareholders nowadays. What with the successful introduction this year of the
company’s Intelligent Pet Care™ line, featuring BlueTooth® and wireless
connectivity, for its SmartScoop® – Intelligent Litter Box, SmartLink™ Feeder –
Intelligent Pet Bowl, and SmartLink™ Waterer – Intelligent Water Fountain.
The debut of other
products, like the company’s 100% Natural Switchgrass BioChar litter, further
enhances its growing brand presence among those key high-income households that
every product developer today is trying to court. And OurPet’s Company has a
thriving online ecommerce presence, both via its own site and ecommerce giants
like Amazon, where the company’s products typically have superb reviews/ratings
from customers.
While small physical
operators in the industry continue to come under fire from big-box specialty
stores, the industry continues to consolidate and more of the retail
transactions migrate to digital (with mobile leading the way), a company like
OPCO is supremely well-positioned to profit through a tight mix of killer
designs that have lasting brand/product appeal. Appeal that is based on robust
materials, intelligent engineering, and a deep-seated need to understand the
psychology of pets, so that products can be made to enhance the lives of what
are for most households just another beloved member of the family.
For more
information, visit the company’s website at www.ourpets.com
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