Petco Health & Wellness
stock lost a quarter of its value Wednesday after the pet goods retailer posted an unexpected loss and said shoppers are holding back.
Petco posted a third-quarter loss of five cents a share from revenue of $1.49 billion. Analysts surveyed by FactSet expected the retailer to report earnings of two cents a share on revenue of $1.51 billion.
In the same period last year, Petco reported earnings of 16 cents a share. Revenue was $1.5 billion.
“Our third quarter results were below our expectations as we continue to navigate a challenging consumer environment,” Chief Executive Ron Coughlin said in the earnings release. Coughlin said that Petco will respond quickly.
“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,” Coughlin said.
Petco management said on a call to discuss the results on Wednesday morning that many customers are choosing to buy less expensive items for their pets in response to inflation and high interest rates.
Petco cut its forecast for earnings in fiscal 2023 to eight cents a share from an earlier call of 24 cents to 30 cents a share.
“Guidance was reduced further due to continued softness in discretionary items. Expectations into the print were low but the bigger than expected guide down will pressure stocks further,” Evercore ISI analyst Oliver Wintermantel wrote in a research note Wednesday. Wintermantel rates the stock as In Line with a target of $5 for the price.
Shares of Petco were down 25% to $2.87 in late morning. It was the stock’s largest percentage decline yet, putting the shares on track to close at a record low, according to Dow Jones Market Data.
Write to Angela Palumbo at angela.palumbo@dowjones.com
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