Petco closing Drs. Foster and Smith within days
Screenshot from drsfostersmith.com
Drs. Foster and Smith is discounting pet medications and merchandise ahead of the company's closure Feb. 12.
Drs. Foster and Smith will close next week, laying off 289 employees who work for the company in Rhinelander, Wisconsin.
The online pet pharmacy succumbed to a decision by Petco to close the company, effective Feb. 12. Petco, which bought Drs. Foster and Smith for an undisclosed amount in 2015, has partnered with another online pharmacy, one that sells medications for both humans and animals.
Drs. Foster and Smith notified customers by email on Jan. 28. The message said customers' log-in information for the Drs. Foster and Smith website, as well as any future orders, will be moved to petco.com and filled by Express Scripts Pharmacy, an online company headquartered in St. Louis that was acquired by Cigna Corp. late last year.
The email promises the change will provide "better, faster service." It's signed, "Sincerely, Drs. Foster and Smith."
Petco announced its "new strategic alliance" with Express Scripts in a Nov. 19 press release. Asked how Express Scripts provides service superior to that of Drs. Foster and Smith, Petco officials said the company uses "industry-leading technology and fulfillment processes." "... [W]e're able to serve pet parents faster and more efficiently, making it easier and more affordable to get the medicines their pets need, when they need them," reads a statement by Petco to the VIN News Service.
Petco, which operates more than 1,500 retail stores throughout the U.S., Mexico and Puerto Rico, added that the decision to close Drs. Foster and Smith was not easy, "nor was it made lightly."
"We appreciate that it has a very real effect on both individuals and the broader community in Rhinelander," Petco said. "All affected employees have been notifed and provided severance and transition support."
Members of the Rhinelander community are dismayed, shocked that Drs. Foster and Smith is going out of business after being one of the largest online and catalogue sellers of pet products in the country. According to a local media report, the company was one of the area's largest employers. State officials tried to convince Petco to stay, without success. A community response team recently was created to tackle the anticipated rise in unemployment, and local food pantries are said to be preparing.
Drs. Foster and Smith is named for three veterinarians from northern Wisconsin who cofounded the company in 1983: Marty Smith and brothers Race and Rory Foster. At the time, buying and selling pet supplies and medications by mail order, outside of the traditional in-house pharmacies of veterinary practices, was a novel business model. Within a decade, Drs. Foster and Smith had added a warehouse and private-label products. The company began selling online in 1998 and opened a licensed pharmacy five years later. (Drs. Foster and Smith previously sold medications under veterinary laws that authorize practicing veterinarians to dispense drugs.)
Rory Foster died of Lou Gehrig's disease in 1987. Race Foster and Smith ran the company until 2014, when they sold to Petco. A media report about the deal put annual revenue for the hybrid catalogue and online business in the range of $250 million. At the time, Petco was dually owned by Leonard Green & Partners, a private equity firm, and TPG, a private investment firm.
Terms of the deal, including its purchase price, were not disclosed publicly. The acquisition closed in early 2015.
Reaction to the sale of Drs. Foster and Smith reverberated through the veterinary landscape, with many in the profession lamenting that the veterinarian-run company was being swallowed by a major retailer. Foster said in a 2014 interview with VIN News that he hoped to stay with the company for at least five years. But by late 2015, Petco, too, had changed hands.
Leonard Green and TPG sold Petco for $4.6 billion to CVC Capital Partners, a private equity firm, and the Canada Pension Plan Investment Board, an investment management organization with ties to the Canadian government. As an arm of Petco, Drs. Foster and Smith was part of the sale.
The new Petco owners replaced many who worked in the company. Foster left his namesake, Drs. Foster and Smith.
Reached last week by email, Foster declined to comment on the closure of the business he spent decades building, other than to say, "I am saddened for the community and the employees, but I also understand the decisions were not mine to make."