Repositioning Businesses
Pet Supplies Plus is the nation’s leading franchisor and operator of pet-specialty stores. Founded in 1988, PSP provides a customer-centric shopping experience that blends the advantages of national scale with those of a friendly, local neighborhood pet store with a streamlined design that makes shopping easy to navigate. PSP’s stores offer a wide assortment of proprietary and third-party branded pet foods, hard goods, and services. PSP also offers user-friendly online shopping with same-day delivery from local stores or curbside pickup. At the time of Sentinel’s investment, PSP’s system comprised 448 stores in 33 states, split evenly between franchised and company-owned locations.
Background
PSP was previously owned by a private equity firm that acquired the business from its founders in 2010 and focused their efforts on revitalizing the company-owned store base and adding captive distribution capabilities. In late 2017, PSP’s owners retained an investment bank to manage a sale. Sentinel was selected as the buyer because of our deep experience in franchising and multi-unit investments, the closing certainty we provided, and our excellent cultural fit with management.
Opportunity
- To accelerate the growth of PSP’s franchise store base by strengthening its underdeveloped franchising capabilities.
- To attract new customers and increase stickiness by investing in PSP’s ecommerce capabilities and in-store pet services. By adding captive distribution, we believed PSP could better serve franchisees. These initiatives were designed to fuel sales growth, capture additional margin, and create an omnichannel shopping platform.
Accomplishments
Improved Franchise Mix and Grew Unit Backlog: Under Sentinel’s ownership, PSP grew its franchise store count by 92 units and created a 200-store backlog of sold-but-unopened franchised units. PSP also developed a compelling franchise conversion strategy for independents, which added 30 new units to PSP’s system.
Implemented an Online Strategy: PSP successfully rolled out a systemwide ecommerce shopping capability, including curbside pickup and store-to-home delivery for nearby customers. PSP also laid the groundwork for a subscription loyalty program for its more than 11 million customers.
Invested in Self-Distribution: PSP added two forward distribution centers, which greatly expanded its captive distribution capabilities and gave its franchisees a competitive edge.
Outcome
In under 2½ years, PSP greatly accelerated its growth and profitability, significantly grew its franchised store count, created a robust backlog of franchised units, and developed an omnichannel sales capability. Having achieved our investment objectives, we sold PSP to a strategic buyer in a highly successful transaction for Sentinel and management.
Case studies have been selected for illustrative purposes for management teams of midmarket companies considering a partnership with Sentinel and should not be considered an offer or solicitation of services or an actual or implied endorsement of Sentinel or any security, investment, or portfolio company. The portfolio companies highlighted are not representative of all current and prior investments of Sentinel. A list and description of investments since Sentinel’s inception is available on this website.