Petco Health And Wellness Company, Inc. WOOF reported Q3 sales of $1.494 billion, missing the analyst consensus of $1.510 billion. Sales decreased 0.5% year-over-year.
The company reported an adjusted EPS loss of $(0.05), missing the analyst consensus for EPS of $0.02.
"Our third quarter results were below our expectations as we continue to navigate a challenging consumer environment..," said Petco CEO Ron Coughlin.
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% versus the prior year.
Adjusted EBITDA was $72.2 million, lower than $120.2 million in the prior year.
Operating cash flow in the quarter under review was $34.4 million compared to $109.4 million in the prior year.
The company exited the quarter with cash and equivalents worth $139.78 million.
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.
In Q3, Petco paid down $15 million in principal on its term loan, for a total of $75 million in principal payments year-to-date.
Outlook: Petco reiterated its FY23 net revenue of $6.150 billion-$6.275 billion versus the $6.25 billion estimate.
The company slashed the adjusted EPS outlook sharply to $0.08 ($0.27 estimate) from the prior outlook of $0.24-$0.30).
In FY23, the company sees an Adjusted EBITDA of approximately $400 million (prior outlook: $460 million-$480 million).
The company also plans to 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. The company continues to expect to achieve $40 million in savings in year one.
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Price Action: WOOF shares are trading lower by 16.4% to $3.21 premarket on the last check Wednesday.
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