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. 👎