Key Takeaways
- Petco had a smaller-than-expected quarterly loss and higher revenue than anticipated as sales of its pet services increased.
- The provider of pet food and other pet supplies, along with veterinary services, also gave current-quarter guidance ahead of forecasts.
- Petco cut costs as reductions in pet adoptions and higher prices have negatively impacted the pet care sector.
Shares of Petco Health + Wellness Company (WOOF) skyrocketed in intraday trading Wednesday after the pet supplies and veterinary care provider posted better-than-anticipated results and revenue guidance on higher sales of services.
Petco’s first-quarter adjusted loss narrowed to $0.04 per share from $0.06 a year ago, beating estimates. Revenue fell 1.7% to $1.53 billion but was also better than analysts’ expectations.
Sales at the company’s Services and Other division increased 4% to $249.4 million. They were boosted by a 10% jump in Services and Vet care revenue, driven by “ongoing strength in our vet hospitals, mobile clinics and grooming services.”
Products unit sales slid 3% to $1.28 billion.
‘Meaningful Progress’ Repositioning Business for Growth
Interim Chief Executive Officer (CEO) Mike Mohan, who took over in March, said Petco “made meaningful progress against our strategy to reposition the business for sustainable and profitable growth.”
The company, along with others in the pet care sector, have been struggling as the boom in pet adoptions during the COVID-19 pandemic has slowed, and inflation has led pet owners to buy lower-priced food and cut other pet costs.
Petco reduced its capital expenditures by 47% year-over-year, and raised its liquidity by 4%. It predicted current-quarter sales would be approximately $1.53 billion, more than forecasts.
Petco shares soared 24% to $3.03 as of 1:48 p.m. ET Wednesday but remain in negative territory for 2024.