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Petco CEO: 'We have no exposure' to banks in turmoil

There is no reason for Petco (WOOF) investors to bark at management during the current banking crisis, at least when it comes to cash flow management.

"From a banking standpoint, the vast majority of our deposits are with the large national players — top tier players," Petco CEO Ron Coughlin said on Yahoo Finance Live (video above). "We have no exposure to any of the banks that have been discussed over the last few days."

Coughlin added the company has taken some action in order to protect its pet services business from rising interest rates.

A dog in pink shades and covered in dollar bills in California.
A dog in pink shades and covered in dollar bills in California. (Getty Images) (Geraint Rowland Photography via Getty Images)

"We have also put a collar on our debt to cap the impact from any future interest rate hikes," Coughlin said. "So we have insulated ourselves from that."

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Petco ended its most recent quarter with $202 million in cash and equivalents.

Despite the close focus on cash and debt management in an uncertain macroeconomy, Petco stock fell 11% in afternoon trading on Wednesday amid a quarterly earnings miss and guidance shortfall.

While the company saw strength in pet food, discretionary areas of the business were hurt by consumers being more cautious in their spending.

Here is how Petco performed compared to Wall Street estimates:

  • Q4 net sales: $1.58 billion vs. $1.59 billion

  • Diluted EPS: $0.23 vs. $0.24

  • 2023 sales guidance: $6.15 billion to $6.28 billion

The results are “a bit of a noisy print, but FY23 profit outlook is seemingly weaker,” pointed out Baird analyst Peter Benedict in a client note.

But at least the company's cash is safe inside the large banks. That at least deserves a tail wag.

Brian Sozzi is Yahoo Finance's Executive Editor. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn. Tips on the banking crisis? Email brian.sozzi@yahoofinance.com

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