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.