Give pet supply retailer Petco (NASDAQ:WOOF) credit; it hasn’t given up, even after years of open decline. In fact, it’s just moved to replace its CEO, though investors aren’t happy about the outcome of this latest game of C-suite musical chairs. Petco shares are down over 7% in Wednesday morning’s trading session.
Petco’s CEO, Ron Coughlin, is leaving the position and making room for another—albeit slightly different—industry veteran to step in. This time, the top slot at Petco goes to former Best Buy (NYSE:BBY) executive R. Michael Mohan. Mohan will step in as interim CEO while Petco goes on a hunt for a new full-time model.
Coughlin, meanwhile, will apparently stick around to “support the leadership transition.” Petco turned to Mohan, noted board member Cameron Breitner, thanks to his “…highly successful track record across multiple segments of the retail industry….” A look at Best Buy today, though, might prompt some to wonder just how successful that really was.
Modest Successes
Reports further note that Coughlin’s tenure wasn’t without success. He’d been working to move the company into more health and wellness alternatives, which is reasonable. A June 2023 study found that 76% of pet-owning respondents were willing to go into debt in order to save their lives, which suggests plenty of willingness to spend on animal health and wellness.
The problem, though, was the speed of the transition. Petco’s latest earnings report came in at $0.02 per share, in line with expectations, and a modest beat in revenue, which came in at $1.67 billion against $1.62 billion from analysts’ expectations. However, Coughlin has been CEO since 2018, suggesting things weren’t moving fast enough.
Is Petco Good to Invest In?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on WOOF stock based on one Buy and two Holds assigned in the past three months, as indicated by the graphic below. After a 74.36% loss in its share price over the past year, the average WOOF price target of $3.79 per share implies 59.92% upside potential.
