06:18 AM EDT, 09/11/2024 (MT Newswires) -- Petco Health & Wellness (WOOF) shares declined early Wednesday after the pet store chain swung to a fiscal second-quarter loss and expects to continue to be in the red for the ongoing three-month period.

The company anticipates to log an adjusted loss of between $0.03 and $0.04 a share for the current quarter, it said late Tuesday, while the consensus on Capital IQ is for a $0.03 loss. Revenue is pegged at about $1.5 billion, in line with the Street's current view. The stock fell 3.9% in premarket activity.

In July, Petco brought in former Five Below (FIVE) Chief Executive Joel Anderson to assume the top role at the company. Two months earlier, it hired former Lululemon Athletica (LULU) and Gap (GPS) executive Glenn Murphy as executive chairman, to support its efforts to improve profitability and boost long-term growth.

"Our top priority is to prove - improve profitability, focusing specifically on things that will have the greatest impact to our business," Anderson said during a late Tuesday conference call, according to a Capital IQ transcript. "If the first half of this year was about setting the trajectory of our transformation, the back half is about executing against it and setting the stage for future profitable growth."

For the quarter ended Aug. 3, Petco recorded an adjusted loss of $0.02 per share versus earnings of $0.06 a year earlier. The market estimated the company to report a per-share loss of $0.03. Revenue edged down 0.5% to $1.52 billion, just shy of the Street's forecast.

Comparable sales inched 0.3% higher during the quarter, compared with five Capital IQ-polled analysts' estimate for a 0.4% decrease. By segment, revenue in the consumables business ticked up 1% to $744.8 million, while supplies and companion animals declined 5% to almost $519 million, according to a presentation. The services and other division logged revenue growth of 3%.

Gross margin deteriorated by 60 basis points on a yearly basis to 38.1%, weighed down by softness in the company's discretionary categories, Chief Financial Officer Brian LaRose said on the call. Selling, general and administrative expenses widened to $578.3 million from nearly $569 million, according to the company.

"The entire Petco team is focused on controlling what we can to deliver structural improvements to our underlying financials and work towards clear and achievable targets on the path to sustained and profitable growth," LaRose told analysts. For fiscal 2024, Petco continues to project net interest expense of about $145 million and capital expenditures of roughly $140 million.

Price: 2.95, Change: -0.12, Percent Change: -3.91