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Petco swings to a profit and boosts forecast, citing customer growth, but shares fall

Shoppers wait in a line outside a Petco pet store in Hollywood, California, on April 23, 2020 during the novel coronavirus pandemic.

Robyn Beck | AFP | Getty Images

Petco Health and Wellness Company reported Thursday first-quarter earnings that outpaced Wall Street’s estimates as a surge in pet adoptions continues to help the retailer recruit new customers.

Despite the better-than-expected performance, and an increased earnings forecast, Petco shares fell nearly 3% in premarket trading.

“We’re attracting new customers and gaining market share in a growing category,” said Ron Coughlin, chairman and chief executive, in a press release.

Here’s what the company reported for the fiscal first quarter ended May 1, according to Refinitiv consensus estimates:

  • Earnings per share: 17 cents adjusted vs. 9 cents expected
  • Revenue: $1.4 billion vs. $1.27 billion expected

In the quarter, Petco reported net income of $7.56 million, or 3 cents per share, compared with a loss of $31.2 million, or 15 cents a share, a year ago.

Excluding items, the company earned 17 cents per share. Analysts polled by Refinitiv had expected earnings of 9 cents per share.

Total revenue grew by 27% to $1.41 billion from $1.11 billion a year ago, also outpacing estimates of $1.27 billion.

Petco’s same-store sales rose 28% from a year ago.

Petco said it gained 1.2 million net new customers during the quarter, which is a multiyear high.

“The category acceleration combined with a strengthening of our customer base give us confidence to raise our full year guidance,” Coughlin said.

The retailer expects revenue this year to be between $5.48 billion and $5.58 billion, up from a prior forecast of $5.25 billion to $5.35 billion.

Its outlook for earnings was lifted to a range of 73 cents to 76 cents per share, from a previous forecast of 63 cents to 66 cents per share.

Correction: Petco beat Wall Street’s earnings expectations.

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