HomeMarket NewsSmall CapsPetco's Disastrous Financial Report Wipes Out Stock Value

Petco’s Disastrous Financial Report Wipes Out Stock Value

Actionable Trade Ideas

always free

woof 1

Petco Health And Wellness Company, Inc.Β WOOF has announced its Q3 sales figures, signaling some rough sailing ahead. The company reported Q3 sales of $1.494 billion, showing a decrease of 0.5% year-over-year, much to the chagrin of analysts whose consensus had been $1.510 billion.

Adding salt to the wound, Petco recorded an adjusted EPS loss of $(0.05), missing theΒ analyst consensus for EPS of $0.02.

Reeling from the financial blow, Petco’s CEO Ron Coughlin expressed disappointment, remarking that the results fell below the company’s expectations. The challenging consumer environment was cited as one of the hurdles.

While the company experienced growth in consumables and services, their supplies and companion animal business saw a substantial dip of 8.8% compared to the previous year. Adjusted EBITDA plummeted to $72.2 million from $120.2 million in the prior year, indicating a significant decrease in profitability.

Petco’s operating cash flow during the quarter amounted to $34.4 million, down from $109.4 million in the previous year, underscoring the financial distress the company finds itself in.

Following the distressing results, Petco took a $1.2 billion non-cash goodwill impairment charge linked to goodwill recorded back in fiscal 2015. This was attributed to the decline in the company’s stock price, painting a grim picture of Petco’s financial landscape.

Furthermore, the company paid down $15 million in principal on its term loan in Q3, reaching a total of $75 million in principal payments for the year.

The company’s exit from the quarter left it with cash and equivalents worth $139.78 million, indicating financial strain and limited liquidity.

The outlook for Petco doesn’t offer much solace either. While the company reaffirmed its FY23 net revenue in the range of $6.150 billion-$6.275 billion, the adjusted EPS outlook was slashed to $0.08 from the prior range of $0.24-$0.30, ringing alarm bells for investors.

The company also scaled back its FY23 Adjusted EBITDA estimate to approximately $400 million, down from the initial projection of $460 million-$480 million.

In light of these disheartening results, Petco is planning an operational reset, with a focus on bolstering profitability and competitive positioning. The company aims to introduce a cost action plan outlined in Q2, striving to achieve $40 million in savings within the first year.

Read Next:Β Why Discount Store Company Dollar Tree’s Shares Are Falling Today

Price Action:Β WOOF shares tumbled by a staggering 16.4% to $3.21 premarket, underscoring the dismal state of affairs at Petco Health And Wellness Company, Inc.

Photo Via Company

Swing Trading Ideas and Market Commentary

Need some new swing ideas? Get free weekly swing ideas and market commentary from Jonathan Bernstein here: Swing Trading.

Explore More

Weekly In-Depth Market Analysis and Actionable Trade Ideas

Get institutional-level analysis and trade ideas to take your trading to the next level, sign up for free and become apart of the community.