The EPS of Petco Health and Wellness Company Inc. (WOOF) for Q4 2024 fell short of forecasts, as indicated by the negative EPS of -$0.05, missing the forecast of $0.0012. Several factors contributed to this outcome:
- Revenue Decline: Despite reporting a revenue of $1.55 billion for Q4 2024, which aligned with prior expectations, the company experienced a 7.3% year-over-year decrease, primarily due to the absence of a 53rd week in the 2023 calendar34. This decline in revenue likely had a direct impact on the profitability metrics, including EPS.
- Gross Profit Decrease: Petco's gross profit fell by 3% to $589 million, while the gross margin improved by 180 basis points to 38%2. This indicates that although the company was able to maintain its gross margin, the overall gross profit declined, which would naturally affect the EPS.
- Higher Operating Expenses: The company's SG&A (Sales, General, and Administrative) expenses increased by 60 basis points to 36.8% of net sales5. This suggests that Petco incurred higher operating costs relative to its sales, which could have squeezed the profitability and contributed to the negative EPS.
- Debt Burden: Petco carries a significant debt burden of $2.99 billion, which poses a challenge for the company's financial health and can impact its ability to generate earnings2. The high debt levels can lead to higher interest expenses, further affecting the net income and, consequently, the EPS.
In summary, Petco's Q4 2024 EPS fell short of forecasts due to a combination of revenue decline, gross profit decrease, higher operating expenses, and significant debt levels. These factors collectively impacted the company's overall profitability, leading to a negative EPS that missed the forecast.
4/12/2025 10:17am
