Petco threatened by bankruptcy

The US store chain Petco is one of a number of retailers to be threatened by bankruptcy this year, according to a report in industry magazine Retail Dive on 2 October. It refers to a report of the credit agency Credit Risk Monitor, which bases its assessment on its own FRISK score.

The FRISK score evaluates the financial stress level of a company based on the probability of it filing for bankruptcy over a period of 12 months. The score is given on a scale of 1–10, with 1 representing the highest risk. A rating of 5 denotes “average” financial stress and an “average” risk of bankruptcy. A FRISK score of 2 was assigned to Petco, indicating a probability of 4 to 10 per cent that it will file for bankruptcy in the next 12 months.

Petco reported double-digit sales increases in 2020 and 2021 before sales slowed to a decline last year. This year the company reported a modest rise in sales of 3.4 per cent but suffered losses in the second quarter. Added to this is the fact that Petco has significant debt and its market capitalisation has declined by 65 per cent over the last 12 months, according to the firm.