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Sept. 26, 2020, 8:48 a.m. EDT

General Mills and Tractor Supply among the companies that stand to make long-term gains from COVID-related ‘pet boom’

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Tonya Garcia

Companies in the pet care category are poised to benefit from what Bank of America analysts call the current “pet boom”: As more people move out of cities and work from home due to COVID-19, they have the time and space to adopt an animal.

Consumer businesses that could reap the rewards now and into the future include food company General Mills Inc. /zigman2/quotes/206659526/composite GIS +0.23% , rural lifestyle retailer Tractor Supply Co. /zigman2/quotes/202009274/composite TSCO -1.24% and e-commerce pet supply company Chewy Inc. /zigman2/quotes/212690528/composite CHWY +6.66%

“Americans spending more time at home have taken on projects from home improvement to crafting, and have also been adopting new pets,” analysts led by Elizabeth Suzuki wrote. “We expect the pet boom to provide a multi-year tailwind to these sectors.”

Read: Some pet owners are spending more than $2,000 a year on their dogs

People starved for companionship in a time of greater isolation, those taking advantage of the greater space in homes outside of major cities, and new pet owners who are using the extra time that the coronavirus affords to train a pet are driving an increase in pet adoption, according to Bank of America.

According to the latest poll of more than 1,000 U.S. consumers in its “Home Work” series, 69% have at least one animal and 37% adopted a pet in the six months leading up to September 2020.

There are about 95 million cats and 90 million dogs in the U.S.

COVID-19 has also accelerated the trend towards online retail.

And: Retailers are shutting stores amid COVID-19 but could be getting stronger in the process, says BMO

“For pet food and products specifically, online retailers are becoming increasingly important to pet parents,” Bank of America said.

Online pet spending reached its peak growth, up 57% year-over-year, in April. It has remained up, with the year-over-year increase as of Sept. 12 at 36%, based on a seven-day moving average.

“While pet specialty stores were still the preferred channel for pet products per our survey (36% of respondents preferred over other channels), 22% of respondents stated that they prefer to buy pet food and supplies online.”

General Mills said during its earnings announcement on Wednesday that it gained market share in the pet category during the fiscal first quarter.

The Blue line of pet food is part of the General Mills portfolio.

“In pet, we’re reaching out to first-time Blue e-commerce buyers to encourage them to transition to subscription-based purchases to help keep these new consumers in the Blue franchise,” said Chief Executive Jeffrey Harmening, according to a transcript of prepared statements provided by the company.

General Mills reported an earnings beat and raised its dividend.

/zigman2/quotes/206659526/composite
US : U.S.: NYSE
$ 61.12
+0.14 +0.23%
Volume: 2.31M
Oct. 27, 2020 4:00p
P/E Ratio
16.36
Dividend Yield
3.34%
Market Cap
$37.28 billion
Rev. per Employee
$414,842
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/zigman2/quotes/202009274/composite
US : U.S.: Nasdaq
$ 134.16
-1.69 -1.24%
Volume: 1.35M
Oct. 27, 2020 4:00p
P/E Ratio
20.83
Dividend Yield
1.19%
Market Cap
$15.83 billion
Rev. per Employee
$259,379
loading...
/zigman2/quotes/212690528/composite
US : U.S.: NYSE
$ 67.72
+4.23 +6.66%
Volume: 2.51M
Oct. 27, 2020 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$26.14 billion
Rev. per Employee
N/A
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