Connect with us

Press Releases

Petco Health + Wellness Company, Inc. Reports Third Quarter Earnings

Comparable sales were flat year-over-year and increased 4.1 percent on a two-year basis.

mm

Published

on

(PRESS RELEASE) SAN DIEGO — Petco Health and Wellness Company, Inc. (Nasdaq: WOOF), a complete partner in pet health and wellness, announced its third quarter 2023 financial results.

In the third quarter of 2023, Petco delivered net revenue of $1.49 billion, down 0.5 percent versus prior year. The company’s consumables business was up 1.8 percent versus prior year, and services and other business was up 15.0 percent versus prior year. Growth in the company’s consumables and services and other business was partially offset by the company’s supplies and companion animal business, down 8.8 percent versus prior year.

During the third quarter, Petco recorded a $1.2 billion non-cash goodwill impairment charge associated with goodwill originally recorded in fiscal 2015, and due to decline in the company’s stock price. This drove a GAAP net loss of $1.2 billion or $(4.63) per share compared to GAAP net income of $19.9 million or $0.07 per share in the prior year. Included in Q3 EPS is $0.03 of incremental interest expense year-over-year.

“Our third quarter results were below our expectations as we continue to navigate a challenging consumer environment and we are taking swift and decisive action to improve the performance of our business by broadening our appeal with customers and tightly managing costs and capital. This includes the introduction of the category’s largest national cat and dog food value brands to meet the needs of all pet parents and deliver incremental profits over time,” said Petco CEO Ron Coughlin. “We’re confident these actions, combined with continued growth in services, omni-channel capabilities, an industry-leading premium assortment, and dedicated Petco partners will better position us to capture the long-term growth trends in the category and deepen our connection with all pet parents.”

As previously disclosed, in the third quarter of 2023, Petco paid down $15 million in principal on its term loan for a total of $75 million in principal payments year-to-date.

On the earnings conference call, management will also outline an operational reset of the business, focusing on increasing profitability and competitive positioning. This will include an update on the cost action plan outlined in Q2, as part of targeting annualized gross run rate cost savings of $150 million by the end of fiscal 2025, from merchandise, supply chain, and general G&A categories. The company continues to expect to achieve $40 million in savings in year one.

Advertisement

(1) Adjusted EBITDA, Adjusted Net Income, Adjusted Earnings Per Share (“Adjusted EPS”), and Free Cash Flow are non-GAAP financial measures. See “Non-GAAP Financial Measures” for additional information on non-GAAP financial measures and a reconciliation to the most comparable GAAP measures.

Fiscal 2023 Guidance

The company is updating its fiscal 2023 guidance for Adjusted EBITDA and Adjusted EPS and now expects:

*Assumptions in the guidance include that economic conditions, currency rates and the tax and regulatory landscape remain generally consistent. Adjusted EPS guidance assumes approximately $145 to $155 million of interest expense, an estimated $43 to $53 million increase in interest expense year-over-year, a 26 percent tax rate, and a 268 million weighted average diluted share count (prior guidance assumed a 269 million weighted average diluted share count). The Company estimates that the increase in interest expense will impact Adjusted EPS by approximately $0.12 to $0.15 per share. Furthermore, Fiscal 2023 will be a 53-week year, leading to an incremental week of operations. Adjusted EBITDA and Adjusted EPS are non-GAAP financial measures and have not been reconciled to the most comparable GAAP outlook because it is not possible to do so without unreasonable efforts due to the uncertainty and potential variability of reconciling items, which are dependent on future events and often outside of management’s control and which could be significant. Because such items cannot be reasonably predicted with the level of precision required, we are unable to provide outlook for the comparable GAAP measures. Forward-looking estimates of Adjusted EBITDA and Adjusted EPS are made in a manner consistent with the relevant definitions and assumptions noted herein and in our filings with the Securities and Exchange Commission.

Earnings Conference Call Webcast Information

Advertisement

Management will host an earnings conference call on November 29, 2023 at 8:00 AM Eastern Time to discuss the company’s financial results. The conference call will be accessible through a live webcast. Interested investors and other individuals can access the webcast, earnings release, earnings presentation, and infographic via the company’s investor relations page at ir.petco.com. A replay of the webcast will be archived on the company’s investor relations page through December 13, 2023 until approximately 5:00PM Eastern Time.

About Petco, The Health + Wellness Co.

Founded in 1965, Petco is a category-defining health and wellness company focused on improving the lives of pets, pet parents and our own Petco partners. We’ve consistently set new standards in pet care while delivering comprehensive pet wellness products, services and solutions, and creating communities that deepen the pet-pet parent bond. We operate more than 1,500 pet care centers across the U.S., Mexico and Puerto Rico, which offer merchandise, companion animals, grooming, training and a growing network of on-site veterinary hospitals and mobile veterinary clinics. Our complete pet health and wellness ecosystem is accessible through our pet care centers and digitally at petco.com and on the Petco app. In tandem with Petco Love, a life-changing organization, we work with and support thousands of local animal welfare groups across the country and, through in-store adoption events, we’ve helped find homes for nearly 7 million animals.

Advertisement

FEATURED VIDEO

NASC Media Spotlight

At first it was just an idea: Animal supplements needed the same quality control that human-grade supplements receive. But that was enough to start a movement and an organization —the National Animal Supplement Council — that would be dedicated to establishing a comprehensive path forward for the animal supplements industry. In this Media Spotlight interview, NASC’s president, Bill Bookout, talks to PETS+ interviewer Chloe DiVita about the industry today: Where it’s headed, what’s the latest focus and why it’s vital to gain the involvement of independent pet product retailers.

Promoted Headlines

Most Popular