Pet retailer Petco Health and Wellness Co. (NASDAQ:WOOF) declined in pre-market trading after the company swung to a surprise loss in the third quarter. The company reported an adjusted loss of $0.05 per share in Q3 compared to earnings of $0.11 in the same period last year. For reference, analysts were expecting the retailer to report earnings of $0.02 per share.
The retailer posted revenues of $1.49 billion in the third quarter, a decline of 0.5% year-over-year, and fell short of Street estimates of $1.5 billion.
Petco CEO Ron Coughlin commented, “Our third quarter results were below our expectations as we continue to navigate a challenging consumer environment and we are taking swift and decisive action to improve the performance of our business by broadening our appeal with customers and tightly managing costs and capital.”
The company intends to outline its operational plan to increase its profitability and improve its competitive positioning during its earnings call. Petco will detail its Q2 cost action plan and is targeting $150 million in annualized savings by Fiscal Year 2025. The company anticipates initial savings of $40 million in the first year.
Looking forward to FY23, Petco expects to generate revenues in the range of $6.15 billion to $6.27 billion, while adjusted earnings are likely to be $0.08 per share.
Is Petco a Good Stock to Buy Now?
Analysts remain cautiously optimistic about WOOF stock, with a Moderate Buy consensus rating based on one Buy and two Holds. WOOF stock has not performed well this year, sliding by more than 50%. Nevertheless, the average WOOF price target of $5.63 implies an upside potential of 46.6% at current levels.
