The company, which did not expect to become profitable until
2002, failed to raise additional financing of $20 - $30 million
necessary to keep it alive. It then tried without success to sell
the company outright. The share price of the company dropped
yesterday to just 22 cents, down from its high of $11 at the time
of the company's IPO in February this year.
Julie Wainwright, Chairman & CEO of Pets.com said:
"It is well known that this is a very very
difficult environment for business to consumer Internet companies.
With no better offers and avenues effectively exhausted, we felt
that the best option was an orderly wind down with the objective to
try to return something back to the shareholders. We truly feel
that we conducted a lengthy, thorough and thoughtful process to try
to maximise shareholder value."
The company says it plans to sell the majority of its assets,
including inventory, distribution centre equipment, domain names,
content, its brand icon (a talking toy dog that appeared on TV
adverts known as Sock Puppet) and other intellectual property.
The problems that are thought to have affected Pets.com most
include over-discounting of products to attract customers, the
expense of delivering bulky pet supplies, such as cans of dog food,
and the company’s failure to sell sufficient higher-margin products
such as pet toys. The company had 570,000 customers, but that
figure was considered too low to reach profitability in a market
where profit margins are narrow.
