Investors Say $WOOF To Weak Earnings

It was a rough day for pet retailers, with Petco Health & Wellness and Chewy shares both falling on earnings. 😬

Petco reported fourth-quarter adjusted earnings per share of $0.23 vs. the $0.24 expected. Revenues of $1.577 billion rose 4.2% YoY and barely beat the expected $1.57 billion.

Comparable sales rose 5.3% YoY and 18.8% on a two-year basis, with gross profit margins falling 1% YoY to 39.7%. Looking at segments, its consumables business grew 12.1% YoY, and “services and other business” rose 17% YoY. Meanwhile, its supplies and companion business fell 7.8% YoY. 🕵️

While the macro environment has impacted some consumers at the lower end of the income spectrum, those at the top end continue to spend on their pets. As a result, the company says it’s continuing its push into more premium products and expanding its service offerings. 

Executives’ outlook for fiscal 2023 was weaker than expected. They now see net sales of $6.15 to $6.275 billion vs. the $6.36 billion analyst estimate. And adjusted EPS to be down $0.21 to $0.13. They also expect to make $100 million in principal payments on their term loan, with free cash flow of $70.6 million and cash and equivalents of $201.9 million last quarter. Petco’s CEO also pointed out that the company has no exposure to any banks currently facing turmoil.

$WOOF shares fell 17.50% to a fresh all-time low on the news. 🙃

Meanwhile, online pet retailer Chewy reported adjusted earnings per share of $0.16, beating analysts’ expectations for a $0.12 loss. Its revenue of $2.71 billion also topped the expected $2.64 billion.

The company expects $2.72 to $2.74 billion in revenue this quarter and full-year revenue of $11.1 to $11.3 billion. However, executives guided for a flat to declining adjusted margin and a continued decline in active customers this year. 🔻

Its downbeat guidance took precedence over the surprise profit, sending $CHWY shares down about 1% after hours. 👎

More in   Earnings

View All

The Best Buy Barometer

Best Buy shares remain roughly 50% off their pandemic-driven 2021 highs. Much of that has been driven by a slowdown in spending on discretionary goods like computers and household appliances. Although those factors offered a skewed perspective, we can still consider the consumer electronics retailer as a partial measure of consumers’ health. 🧭

In the first quarter, the company reported adjusted earnings per share of $1.15 on revenues of $9.47 billion. That was mixed vs. the $1.11 and $9.52 billion expected. Comparable sales fell 10.1%, also in line with expectations.

Read It

TGT & TJX Spill The Tea On Consumers

After Home Depot’s lackluster results, all eyes are on other retailers for hints about consumers’ health. Today we got more clues from Target and TJX Companies, so let’s take a look.

First up is big-box retailer Target, which managed to hit its financial targets despite a sales slowdown. 🎯

Read It’s Magical Monday

Mondays can be a downer, especially if you’ve been a software stock investor over the last two years. However, today was a bit better after reported better-than-expected first-quarter results. 👍

The cloud-based work management tool competes with Asana, Smartsheet, Atlassian, Adobe, and Microsoft. Unfortunately, like its peers, it fell drastically from its late 2021/early 2022 highs, dropping nearly 85% at its November 2022 low. 😶‍🌫️

Read It

Retailer Gap’s Big Gap

Mall retailer Gap is popping after hours following a narrower-than-anticipated loss. 🤏

The company’s adjusted earnings per share were $0.01, driven by drastic cost-cutting efforts over the last year. Heavy discounting to clear inventory and high air freight expenses had weighed on margins last year but are abating. As a result, gross margins of 37.1% were up 5.6% YoY and 3.5% QoQ.

Read It