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Petco Stock Jumps as Q3 Results Beat Estimates

Petco Health and Wellness Company, Inc. (NASDAQ: WOOF) reported better-than-expected Q3 2024 earnings, leading to a significant rise in its stock price. Despite a net loss, the company showed growth in revenue and key business segments.

Petco Health and Wellness Company, Inc. (NASDAQ: WOOF) has reported its third quarter 2024 financial results, showcasing a performance that exceeded market expectations. The company's earnings report, released on December 5, 2024, revealed a 1.2% increase in net revenue year-over-year, reaching $1.51 billion. This growth was driven by a 2.7% increase in the consumables business and a 5.0% rise in services, although the supplies and companion animal business saw a decline of 2.8%.

Despite reporting a GAAP net loss of $16.7 million, or $0.06 per share, the results were better than anticipated, with an EPS of $-0.02 compared to the estimated $-0.04. This earnings beat was significant enough to cause Petco's stock to rise over 12% in post-market trading, although it later settled below a 10% increase.

Petco's gross profit also saw a 4.7% increase, reaching $575.8 million, and adjusted EBITDA improved to $81.2 million from $72.2 million in the previous year. However, the company faces ongoing challenges, including a high interest expense forecast of approximately $140 million for fiscal 2024, which could impact profitability.

Looking ahead, Petco has provided guidance for the fourth quarter of 2024, expecting revenue of around $1.55 billion and adjusted EBITDA between $90 million and $95 million. This guidance includes a minimum of $10 million in consulting fees as part of the company's transformation efforts.

Petco's CEO, Joel Anderson, expressed confidence in the company's strategic direction, emphasizing efforts to drive profitability and free cash flow. The company continues to focus on strengthening its retail fundamentals to achieve sustainable growth.

Overall, while Petco's Q3 results present a mixed picture with both positive revenue growth and a net loss, the market has responded positively to the earnings beat and the company's forward-looking strategies.

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