11:25 AM EDT, 03/13/2024 (MT Newswires) -- Petco Health & Wellness (WOOF) reported stronger-than-expected fiscal fourth-quarter revenue on Wednesday while the pet store chain announced a formal search for a new chief executive after Ron Coughlin stepped down.

Revenue for the three months ended Feb. 3 rose to $1.67 billion from $1.58 billion the year earlier and surpassed the $1.63 billion average analyst estimate on Capital IQ. Adjusted earnings per share declined to $0.02 from $0.20, as expected.

Results were buoyed by an 8.8% sales increase in Petco's consumables division and a 17% jump in services and other business. The company's supplies and companion animal business slipped 1.4%. Comparable sales declined 0.9% year over year, better than a 2.2% decline seven analysts surveyed by Capital IQ were modeling.

Separately, the pet store operator said that former Best Buy (BBY) Chief Operating Officer R. Michael Mohan will serve as interim CEO while the company searches for a permanent replacement. Shares of Petco were falling 5.9% in Wednesday trade, reversing gains from earlier in the day.

Mohan has served as lead independent director of the Petco board since July 2021. Coughlin will shift into an advisory role to assist the board through the transition.

"The board has spent some time with the executive team over the past several months to assess our operating and financial results," Mohan told analysts on a conference call, according to a Capital IQ transcript. "I'm confident that given our position as a leader in pet health and wellness, we will be able to improve performance in the years ahead."

The company opted not to provide full-year guidance, pointing to the leadership change. For the first quarter, it expects revenue of about $1.5 billion, compared with $1.56 billion it posted for the same period last year. It is forecasting an adjusted loss per share of $0.06, swinging from a profit of $0.06 in the first quarter of 2023.

"While we have made progress in a number of key areas over the last several years, I recognize we have not been executing the way we need to in a number of areas to deliver on our full potential," Mohan said. "Most critically, we have not adapted quickly enough to recent changes in consumer preferences."

"First, we did not anticipate the magnitude of the shift to value in both our consumables and discretionary business; and second, we did not expect customers to pull back as quickly as they have and for this duration when spending on discretionary items," he said.

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