Petco Health and Wellness Company, Inc. WOOF delivered fourth-quarter fiscal 2024 results, where the top line met the Zacks Consensus Estimate and the bottom line lagged the same. This fully integrated health and wellness company of pets registered year-over-year declines in net sales and earnings.

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WOOF’s Quarterly Performance: Key Insights

The Zacks Rank #3 (Hold) company posted break-even earnings per share in the fourth quarter of fiscal 2024, down from adjusted earnings of 2 cents in the year-ago quarter. Also, the metric lagged the Zacks Consensus Estimate of adjusted earnings of 2 cents.

Net sales of $1,552.1 billion dipped 7.3% year over year. This includes the negative impacts of the absence of the 53rd week in fiscal 2023. Comparable sales (comps) increased 0.5% year over year. The Zacks Consensus Estimate for comps growth was pegged at 0.9% in the quarter under review.

Insight Into Petco's Margins & Expenses

Gross profit decreased 2.8% year over year to $589.3 million. We note that the gross margin increased 180 basis points (bps) to 38% from the prior-year period.

Selling, general and administrative expenses decreased 5.7% to $571.8 million. As a percentage of net sales, selling, general and administrative expenses deleveraged 60 bps to 36.8% in the fourth quarter of fiscal 2024.

Adjusted EBITDA came in at $96.1 million compared with $105.3 million in the year-ago period. We note that the adjusted EBITDA margin contracted 10 bps to 6.2% in the fiscal fourth quarter.

WOOF’s Financial Snapshot: Cash, Debt & Equity Overview

Petco ended the quarter with cash and cash equivalents of $165.8 million, and a total stockholders’ equity of $1.11 billion. As of Feb 1, 2025, the operating cash flow was $177.7 million, down from $215.7 million in the prior year. The free cash flow totaled $49.7 million at the end of the fiscal fourth quarter.

WOOF Stock Past Three-Month Performance

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Petco’s FY25 Outlook

For fiscal 2025, net sales are expected to decline year over year in the low-single-digit percentage. Adjusted EBITDA is projected between $375 million and $390 million. Capital expenditure is expected between $130 million and $140 million. The company also expects 20-30 net real estate closures during the year.

For the first quarter of fiscal 2025, net sales are projected to decline year over year in the low-single-digit percentage. Adjusted EBITDA is expected between $82 million and $83 million.

This pet wellness retailer’s shares have lost 36.3% in the past three months compared with the industry’s 9.7% decline.

Key Picks

Some better-ranked stocks are The Gap, Inc. GAP, Tapestry, Inc. TPR and Build-A-Bear Workshop BBW.

The Gap is a premier international specialty retailer offering a diverse range of clothing, accessories and personal care products. It sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for The Gap’s fiscal 2025 earnings and revenues indicates growth of 7.7% and 1.6%, respectively, from the fiscal 2024 reported levels. GAP delivered a trailing four-quarter average earnings surprise of 77.5%.

Tapestry is the designer and marketer of fine accessories and gifts for women and men. It currently has a Zacks Rank of 2 (Buy).

The Zacks Consensus Estimate for TPR’s fiscal 2025 earnings and revenues implies growth of 14.5% and 3%, respectively, from the year-ago actuals. TPR delivered a trailing four-quarter average earnings surprise of 11.9%.

Build-A-Bear Workshop is the leading and only national company providing a make-your-own stuffed animal interactive retail-entertainment experience. It currently has a Zacks Rank of 2.

The Zacks Consensus Estimate for Build-A-Bear Workshop’s fiscal 2025 earnings and revenues implies growth of 4% and 2.1%, respectively, from the year-ago actuals. BBW delivered a negative trailing four-quarter average earnings surprise of 3.1%.

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