PetSmart’s Private Equity Owners Dogged By Worker Rights Campaign

A retail worker advocacy group that previously has pushed Walmart, Amazon, and other retailers to improve wages and working conditions, is turning up the pressure on the private equity owners of PetSmart.

The group, United for Respect, released a report, “Greed Unleashed” in September that accused private equity firm BC Partners of putting profits before the well-being of workers and pets.

Now, United for Respect is taking it up a notch and is seeking to enlist fund investors of BC Partners, PetSmart consumers, and animal rights groups in its fight.

Bianca Agustin, corporate accountability director of United for Respect, said a petition signed by some 500 former and current PetSmart employees in July 2020 received no response from BC Partners. “So then we became committed to a longer term fight to get some change,” Agustin said.

Yesterday, the group sent BC Partners investors a letter outlining its concerns and asking them to contact the private equity firm. It has been holding what it calls “vigils” outside PetSmart stores around the country, with supporters carrying signs and handing out flyers to customers. Supporters also demonstrated outside BC Partners Manhattan offices.

United for Respect also started an online petition aimed at bringing pet lovers into the campaign by raising concerns that animals in the stores aren’t receiving proper care due to understaffing.

BC Partners in 2015 led a consortium of private equity firms in an $8.7 billion deal – one of the largest retail leveraged buyouts at the time – to acquire the then-struggling PetSmart. It went on to be hailed as PetSmart’s savior after a bold move to acquire online retailer Chewy in 2017, and the lucrative spinoff of Chewy as a public company in 2019.

BC Partners views itself as one of the good guys of private equity, and its website highlights its ESG (environmental, social, governance) policies, and the fact that it was one of the first private equity firms to sign the United Nation’s Principles for Responsible Investment statement in 2009.

BC Partners, in response to inquiries for this article, issued a statement saying “The heart of PetSmart has always been – and will continue to be – its associates. Nothing is more important than their health and safety and the safe and responsible care of the animals that pet parents entrust to our care every day.” The statement reiterated the precautions the stores have taken to protect workers from Covid-19, saying it has spent “millions of dollars” on protective equipment and other measures to keep associates, customers and pets safe.”

Complaints by workers during the early months of the pandemic first attracted the attention of United for Respect staff, but now the campaign is focused more on wages and staffing concerns than Covid-19 safety issues.

A Facebook page started in early 2020 by a PetSmart employee as a support group for store employees worried about pandemic triggered furloughs and layoffs, and a lack of information from PetSmart management, alerted United for Respect to complaints about severance for laid-off employees, workplace hazards, understaffed stores, and unfair scheduling.

Robert “Happy” Allen, the employee who started the Facebook page, said he did it to create an online HR department for furloughed employees who needed more information than they were getting from PetSmart. He enlisted a doctor, a lawyer, and a minister as resources for the group.

Allen, who worked for PetSmart for five years as a dog trainer before being terminated in June, 2020, said staffing changes made after BC Partners acquired the company eliminated some of the animal care jobs, and required fewer employees to take on additional pet care responsibilities.

“The culture changed to cutting costs,” Allen said. “It started to feel like the Walmart of pet stores – and it didn’t feel that way when I started.”

The United for Respect campaign has expanded since Allen started his Facebook page in 2020 to become part of a broader indictment of private equity’s track record in retail.

Senator Elizabeth Warren and Congressman Mark Pocan in November sent a letter to BC Partners saying they were concerned that the firm was following in the footsteps of other private equity funds that boosted “profits for themselves at the expense of workers, consumers, and taxpayers.”

BC Partners responded with a letter toa a the lawmakers, a copy of which was obtained by this reporter, which outlined its worker and pet safety standards and noted that an employee engagement survey in July showed workers gave the company positive ratings on several benchmarks.

It also stated that since the pandemic began, PetSmart has paid more than $178 million to front-line associates in wage increases, bonuses, shift differentials, and benefits. Wages have increased by 17%, and the average hourly wage now exceeds $15 an hour, the letter stated.

BC Partners, according to the letter, has supported over $1 billion of reinvestment into the business, and used its Chewy gains to reduce PetSmart’s debt, making it a stronger business than it was when they acquired it.

For PetSmart workers now, United for Respect staff said, the top concerns have shifted from pandemic-related furloughs to what workers see as cost-cutting and staffing changes that put animals at risk, and what will happen to store workers if and when BC Partners decides to cash out of its investment in PetSmart.

“Workers are extremely concerned that any time there’s a private equity owner that their interest is short term,” Agustin said. BC Partners, she said, after holding PetSmart since 2015 is “in that window where private equity tends to start to walk away from the initial investment,” causing workers to want protections in the event of a sale or public offering.

United for Respect has met with large state employee pension funds, but while representatives of at least one fund said they had raised concerns about the worker issues with BC Partners, the fund still decided to reinvest with BC Partners, Agustin said.

The group is asking investors to press BC Partners to meet with PetSmart employees about their working conditions. On December 6, United for Respect staffers delivered another petition, this one signed by over 5,000 people, including current and former PetSmart employees, customers and United for Respect supporters, to BC Partners’ New York offices.

The petition asked for a guaranteed $15 minimum wage, access to full-time hours, employer-paid healthcare, adequate staffing, equipment, and training to ensure animals are protected; severance for employees in the event of bankruptcy or layoffs, and worker representation on the PetSmart board of directors.

It is hard to say what impact the United for Respect campaign has had thus far. Bloomberg reported in October that BC Partners was taking longer than expected to raise money for its 11th flagship investment fund.

In this campaign, United for Respect has a powerful tool it didn’t have in its efforts against Walmart and Amazon – the claim that cost-cutting is hurting animals, as well as PetSmart workers.

According to United for Respect, PetSmart-related dog deaths have more than doubled since BC Partners acquired the company in 2015. BC Partners maintains it has initiated numerous measures to improve pet safety.

“What’s going on at PetSmart stores is hurting humans and non-humans like,” Liz Cabrera Holtz, wildlife campaign manager at World Animal Protection, US, said in the latest press release from United for Respect. “When workers are stressed, when they’re not given the training and resources they need, when they are not treated fairly, animals in their care also suffer,” she said.

The campaign is escalating at a time when all of the big pet retailers – Chewy, Petco, and PetSmart – have to worry about sales de-escalating sharply from the pandemic surges fueled by record numbers of pet adoptions in the United States.

All three retailers had a great 2020, but they could find themselves fighting over a shrinking population of pet parents going forward. That makes this a particularly bad time to be in a fight with a doggedly determined worker rights group.