Petco Health and Wellness Company’s shares fell sharply in Wednesday premarket trading after it swung to a worse-than-expected third-quarter loss after booking a hefty impairment charge.
The pet care retailer reported a 0.5% decline in sales to $1.49 billion for the quarter, below the $1.51 billion expected by Wall Street analysts.
Petco said 1.8% growth in its consumables business and a 15% improvement in services and other business were partially offset by its supplies and companion animal business, down 8.8% versus the prior year.
During the third quarter, it recorded a $1.2 billion non-cash goodwill impairment charge associated with goodwill originally recorded in fiscal 2015, and due to a decline in the company's stock price.
Its adjusted loss per share amounted to $0.05, down from earnings per share (EPS) of $0.11 a year earlier and worse than the $0.02 loss expected by analysts surveyed by Zacks Investment Research.
"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,” CEO Ron Coughlin commented in a statement.
“This includes the introduction of the category's largest national cat and dog food value brands to meet the needs of all pet parents and deliver incremental profits over time.”
For the full year, the company has guided investors to expect revenue of $6.15 billion to $6.275 billion and adjusted EPS of roughly $0.08.
Ahead of the opening bell, Petco’s shares were 14.1% down at $3.30.
Contact the author at stephen.gunnion@proactiveinvestors.com