BARK CEO: The ‘pet category is cycle agnostic’

BARK CEO Manish Joneja joins Yahoo Finance Live to discuss how the pet goods company personalizes dog treats and toys.

Video transcript

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EMILY MCCORMICK: The original BARK company delivered fiscal second-quarter sales that jumped 39% to reach $120.2 million, as growing pet ownership helped drive more than a quarter-million active subscription additions to BARK. For more, we're welcoming on Manish Joneja, CEO of BARK.

Manish, thank you so much for joining us. I want to ask a little bit about the different channels that you have for BARK sales here. Now, of course, you sell both direct to consumer, which is the majority of your revenue, and then also to retail partners, which is about one fifth of sales here. So with the direct-to-consumer channel specifically, what trends have you seen in pet ownership and in spending on the consumer side that have helped drive these results?

MANISH JONEJA: Hi, Emily. Thanks for having me. Yes, you're right. So we are omnichannel. At BARK, our customers can purchase goods from us through our website, but they can also walk in a Target aisle or a Costco aisle and actually get the goods from there. So you can buy a $6 toy if you'd like, or you can get a $30 box or $70 BARK Eats.

You saw that we announced the results recently. We saw 40% growth. Our first half was up 50%. We have 2.1 million active subs. What we're noticing is continued increase in pet ownership, continued increase in pet humanization and premiumization, and e-commerce growth is continuing to grow. So we are really bullish on what the future holds for us as we diversify across channels, as well as diversify across categories.

JULIE HYMAN: And Manish, when you're talking about that growth, where do you expect most of that to come from, and is it contingent? I mean, presumably, people are-- there's still going to be this pet boom, even if it moderates a little bit post-pandemic. So presumably, you're also going to benefit just from more people getting pets.

MANISH JONEJA: Right. So the number of pet households, or dog households, in the US right now are 70 million. We are in about 2.1 million households right now, and that's from BARK Box and Super Chewer. As we diversify our categories to health, to food-- because if you have dogs, there are only two categories where we call ourselves parents-- it's relationship-based-- kids and dogs.

So what we see is pet category is cycle-agnostic. You spend money on your pets, you spend money on your kids, regardless of basically where the economy is right now. And you want to make sure that you take care of their health and happiness. And that's what BARK does is keep them happy.

So what we notice is growth in our direct-to-consumer categories as well as, you know, when you go into commerce categories, which is Target, Costco, Amazon, CVS. And the other part of this is that we're not just in typical retail stores. You can walk into a CVS and you'll see our partnership there. You might be buying the six-pack of Budweiser and you have a seven-pack for your bud. So we've seen consistent growth, which is exactly what we showed in our results.

BRIAN SOZZI: Manish, I caught a lot of flack earlier this year for saying dogs have really gotten overweight during the pandemic. I'm concerned about the health of the country's dog supply. I mean, do you have a big opportunity next year with more health products, whether it's to help pets lose weight or just keep them healthy post-pandemic?

MANISH JONEJA: Yes, absolutely. You know, that's a great question. We spent a lot of time at home with dogs. I'm going to read one anecdote for you, based on a survey we did. 7 in 10 dog parents report their relationship with their dogs grew stronger during the pandemic. This was significantly more than those who say the same about their relationship with their spouses, 49%, their kids 39% and friends 31%. So we love our pets, and we have to feed them better to keep them healthy.

So when you talk to vets, you have to keep your dogs mentally engaged, right? That's a play category and the home category that we work on. You have to keep them healthy where the BARK Eats system comes in. So you might be seeing these boxes on the back.

You know, the dog food and the dog space doesn't have to be mundane or boring. It can be fun, and it can be healthy. What BARK Eats does for dogs is, we actually highly personalize our dog food for your dog. So you can feed them the right amount of food that can keep them healthy.

The second part is keeping their teeth clean. So if you have dogs, you know, 99% of us don't clean our dog's teeth because it's just-- it's not fun. It's not fun for the dog. It's not fun for you. What we created is a formula that's triple enzymatic that actually works on the dog teeth, and they enjoy it. So that's called BARK Bright. So we work backwards from our customers to make sure we can keep them healthy and happy while keeping it fun.

EMILY MCCORMICK: Manish, I also wanted to ask a little bit just about your gross margins here because, I mean, again, you're a consumer product brand or a pet product brand, and your gross margins are at 58.2%. How are you maintaining those kinds of margins, and how long do you think these can be maintained?

MANISH JONEJA: We've always maintained a healthy high 50s to 60 margin. And the way we've been able to do so is because we are digitally native and vertically integrated. What that means is that we design and develop our own products. We don't have to give margin away to the shelves of partners, but we can do that directly. So that creates a really big opportunity for us, especially as we go into the $30 to $40 billion TAM of dog food, which is a really big opportunity for us. We maintain those margins.

And you must have-- one of the things we did recently was, there's a big logistic chaos going on right now. We saw around the corners-- we asked for the shipments coming in, so Christmas and the holiday season is safe for our pets. One of the things we're doing is for Cyber Monday, which is coming up, is we are launching Spider-Man. So we have these unique partnerships that keep it fresh, content engaging, and is able to acquire more customers much more effectively than many others are able to do.