Petco revenue slightly declines, misses earnings estimates amid retail challenges

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Petco revenue slightly declines, misses earnings estimates amid retail challenges
Credit: © Reuters.

Petco Health and Wellness Company Inc. (NASDAQ:WOOF) disclosed its quarterly financial results today, revealing a slight year-over-year dip in revenue and a miss on earnings expectations. The company reported revenues of $1.494 billion, falling short of expectations by roughly $16 million and marking a 0.5% decrease from the previous year. Additionally, the adjusted earnings per share (EPS) came in at a loss of $0.05, contrary to analysts' forecasts for positive earnings.

The pet retailer is facing significant retail headwinds, which CEO Ron Coughlin attributes to an 8% decline in key product categories. This downturn has had a tangible impact on the company's financials, with adjusted EBITDA coming in at $72 million and operating cash flows slightly over $34 million—both figures showing a reduction from the previous year's results.

Despite the challenges, Petco has demonstrated financial discipline. The company has maintained liquidity, with over $139 million in cash on hand after making cumulative debt repayments totaling $75 million year-to-date. This comes in the wake of a substantial non-cash goodwill impairment charge from fiscal year 2015, driven by a decline in the company's stock price.

Looking ahead, Petco has revised its full-year 2023 projections, now expecting net revenue and adjusted EBITDA to be around $400 million. This adjustment reflects the company's commitment to implementing cost-saving measures to navigate the current retail environment.

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