Pet health and wellness company Petco announced second-quarter 2023 earnings results on Thursday (Aug. 24), showcasing strong top line results and free cash flow despite navigating a shift in consumer spending and pressures on its discretionary business.
Despite generating $1.53 billion in net revenue, up 3.4% compared to last year, the company reported a net loss of $14.6 million.
The growth in net revenue was attributed to strong performance in the consumables business, which saw a 6.8% increase, and services and other business, which grew by over 30%. However, the supplies and companion animal business experienced a decline of 9.4%.
Despite these challenges, the company’s operating cash flow increased to $96.6 million, compared to $42.6 million in the prior year, and free cash flow improved to $44.6 million.
Commenting on the results, Petco CEO Ron Coughlin said due to the pressure on discretionary spending, the retailer is taking several strategic actions to strengthen its business, “including initiatives to unlock a targeted $150 million in cost savings and productivity enhancements by the end of fiscal 2025.
“These actions, combined with the enduring competitive advantages of our differentiated offering, will position us even better to deliver sustainable and profitable growth for the long term,” Coughlin said.
Earlier this month, the California-based company announced a partnership with DoorDash to expand on-demand delivery, enabling pet parents nationwide to access Petco’s assortment of products via the DoorDash Marketplace.
The news came on the heels of Petco teaming up with dog nutrition brand Ollie to bring human-grade dog food to Petco customers. The collaboration makes Petco the first nationwide pet retailer selling Ollie’s products, offering pet parents access to a service previously available only online.
Prior to that, in June, the specialty retailer opened its flagship one-stop store for Pet Health and Wellness Center in New York City, a move aimed at blending the best elements of Petco’s physical and digital offerings.
And in January, Petco announced it was bringing together its products and services in a single membership program, Vital Care program, which now includes products, grooming services and veterinary care.
“Building on the strength of our existing two membership offerings, […] we’re making it even easier for customers to understand and maximize the program offerings to provide their pets with the best possible care and get the most value from Petco,” Petco Senior Vice President of Omnichannel Customer Experience Jenny Wolski said at the time.
We’re always on the lookout for opportunities to partner with innovators and disruptors.
Learn More