Petco stock falls after cutting full-year guidance
Petco (WOOF) shares drop after the company slashed its full-year guidance. The company met expectations for adjusted earnings and narrowly beat estimates on revenue for the second quarter. Yahoo Finance Live breaks down the company's second quarter results.
Video Transcript
- Let's also talk a little pets. Petco. Some would say it's where the pets go. They are sinking today after slashing their full-year guidance profit. That dipped to a loss in the second quarter. The company's CEO touted numerous strategic actions, and Petco is taking those to strengthen the business here. Then you're taking a look at shares. They are barking down the wrong tree by about 19% here on the day. Yeah, I know.
- Yeah, the forecast cut is pretty dramatic here. The company now forecasts for its fiscal full year earnings per share of $0.24 to $0.30. That's down from $0.40 to $0.48 previously, so that's a pretty big cut there. This company is not increasing its CapEx. We were just talking about capital expenditures. It's actually cutting its CapEx. Its revenue forecast, though, is unchanged for the full year, which again implies that at least part of the problem here is on the cost side of the equation.
- Yeah, and free cash flow, I mean, that had improved in this most recent quarter. That is one of the bright spots. Came in at about $44.6 million compared to a loss of $27.7 million in the year prior, so a larger question of maintaining that free cash flow performance that investors had seen in this most recent quarter. And you mentioned the guidance already. The capital expenditures particularly are $215 million to $225 million in spending that they're looking to put forward here.
And so it'll be interesting, I think, for Petco, especially in an environment that we're coming out of, where people who maybe brought on or welcomed a furry pandemic pet into the household are now trying to figure out, OK, what is our grown now, hopefully, pandemic pet, what are they consuming?
And for Petco, they're going to hope that household leans further into some of their other businesses within the Petco roof, and I think about how all of these different retailers, especially within the pet care category, have leaned into the care side of that, beyond just kind of the products and the chew toys that you could throw down the hall and have your pet go pick it up. They're also thinking about, all right, what's the maintenance of your pet or the healthcare or the insurance?
- Right, yes, and Petco has leaned into that in recent years.
