Fri, Jun 6, 8:06 PM (43 days ago)
**Petco Health and Wellness Company, Inc. (WOOF) Q1 2025 Financial Summary** **Financial Health and Performance:** - **Revenue:** Total net sales decreased by 2.3% to $1.49 billion from $1.53 billion in Q1 2024. This decline was driven by lower transaction volume and a reduced number of pet care centers. - **Profit Margins:** Gross profit margin improved to 38.2% from 37.8% due to better inventory management and supply chain optimization. - **Operating Income:** The company reported an operating income of $16.4 million, a significant improvement from an operating loss of $16.8 million in the prior year period. - **Net Loss:** Net loss attributable to Class A and B-1 common stockholders was $11.7 million, an improvement from $46.5 million in Q1 2024. - **Adjusted EBITDA:** Increased to $89.4 million from $75.6 million, indicating better operational efficiency. **Cash Flow:** - **Operating Activities:** Net cash used in operating activities increased to $15.5 million from $8.4 million, primarily due to lower sales and higher payouts of prior year accrued incentive bonuses. - **Investing Activities:** Cash used in investing activities decreased to $27.1 million from $31.7 million, mainly due to reductions in new pet care centers and hospitals. - **Financing Activities:** Net cash used in financing activities decreased to $0.3 million from $5.6 million, driven by less cash paid for tax withholdings on equity-based awards and debt refinancing costs. **Earnings Changes and Trends:** - **Comparable Sales:** Decreased by 1.3%, reflecting lower transaction volume and a focus on profitability. - **Services Momentum:** Continued growth in services, driven by strategic investments in customer acquisition and retention. - **Cost Management:** Effective inventory management and supply chain optimization contributed to improved gross profit margins. **Future Operations and Uncertainties:** - **Macroeconomic Factors:** The company faces uncertainties related to interest rates, inflation, tariffs, and global economic conditions, which could impact future performance. - **Liquidity:** As of May 3, 2025, the company had $647.9 million in liquidity, including $133.3 million in cash and cash equivalents and $514.6 million of availability on the ABL Revolving Credit Facility. - **Debt Management:** The company has a secured term loan facility maturing in 2028 and a revolving credit facility with availability up to $581.0 million, subject to a borrowing base. **Conclusion:** Petco Health and Wellness Company, Inc. showed improved operational efficiency and cost management in Q1 2025, despite a decline in net sales. The company's focus on services and strategic investments in customer acquisition and retention are positive trends. However, macroeconomic uncertainties and the need for continued cost management remain key challenges.