Petco Health and Wellness Company (NASDAQ:WOOF) plunged to an all-time low after a Q3 earnings misfire that included adjusted EBITDA being reported at $72.2M vs. $120.2M a year ago, and EPS arriving at -$0.05 vs. $0.02 consensus and $0.11 a year ago.
Goldman Sachs pointed a potential markdown headwind after Petco’s (WOOF) inventory position in Q3 rose at a much higher rate than sales did on a sequential and year-over-year basis. The weak Petco (WOOF) earnings report also led Wells Fargo to lower FY23 EPS and EBITDA estimates, and take its price target down to $3 from $7. The firm pulled its bull rating on WOOF and has the stock rated at Equalweight.
On the earnings conference call (transcript), Petco (WOOF) management laid out plans to discuss an operational reset of the business that includes focusing on improving profitability and competitive positioning, including the previously disclosed cost reduction plan.
Chief Financial Officer Brian LaRose: “We will continue to seek out opportunities to enhance our supply chain and labor models to generate additional compound savings. We are on track to deliver against our projections of $40 million in cost benefits in the first year from the planned $150 million in run rate savings outlined in our Q2 call.”
Petco (WOOF) was down 29.56% at 1:45 p.m on Wednesday on volume of over 20M shares.