+Kota, the second-largest pet food retail chain in Mexico, filed for conciliation with Mexican authorities earlier this year, according to Expansion business magazine.

+Kota still ranks second in the market, behind Petco. Before Petco entered Mexico in 2015, +Kota was the only major chain in the market, with more than 300 branches across the country. It specializes in premium pet food products; its suppliers include Royal Canin and Purina Proplan.

Recent problems contributing to the financial situation?

The retail chain has had a few setbacks in recent years. For instance, press sources say a few of the company’s suppliers sued +Kota for non-payment in 2019.

+Kota also faced a tough media campaign in 2015 when a YouTube video went viral showing an employee apparently abusing a small dog at one of the chain’s stores. After this unfortunate event, the company stopped selling live pets to the public.

Despite the ongoing bankruptcy lawsuit, the company will continue to operate, as the Mexican legal proceeding is in the conciliation phase, which means +Kota is allowed to continue selling products to supplement its cash flow, according to Expansión. Still, +Kota will need to restructure its business and improve its insolvency position to continue to participate in the market and pay its suppliers on time.

+Kota’s fall has deepened with the pandemic

According to a report by Triplethree Internationalthe company’s problems are not new: it began its downsizing process before 2019. Between 2019 and 2021, the company grew from 300 to 181 stores in Mexico.

Fierce competition from Petco, thousands of independent pet stores and online sites, such as Amazon and Mercado Libre, has precipitated the downfall of +Kota in recent years. Then the pandemic likely accelerated its downfall as the company did not overcome the temporary lockdown of outlets, despite their announced migration to phone and online sales.