What happened
Shares of canine-focused pet supplies company Bark (BARK +0.78%) are in the doghouse Friday morning, down 20.8% through 10:50 a.m. ET after the company reported an earnings miss last night.
Expected to lose only $0.09 per share on sales of $134.2 million in its fiscal Q3 2023, Bark instead lost $0.12 per share, despite sales that squeaked past estimates: $134.3 million.
NYSE: BARK
Key Data Points
So what
Bark seemed embarrassed by the results -- to the extent that its press release didn't even mention the per-share loss, reporting only the net loss number (i.e., not divided by shares outstanding). Net losses were $21.3 million for the quarter, 61% worse than a year ago, despite Bark growing its average order value by $2 (to $33.10) and expanding its gross profit margin by 400 basis points to nearly 60%.
Total sales for the company declined 5% year over year.
Now what
Not all the news was bad. As Bark pointed out, despite sales slumping and losses as calculated according to generally accepted accounting principles (GAAP) expanding, Bark achieved its first quarter of positive free cash flow since going public, collecting $331,000 cash. Furthermore, the company's "average order value is growing at the accelerated pace we anticipated," reassured CEO Matt Meeker.
Yet even so, Bark announced plans to lay off about 12% of its workforce -- 126 souls -- in an effort to cut costs and keep growing its cash pile, aiming to save approximately $12 million per year.
Whether even those cuts will be enough to save Bark, however, seems in doubt. Bark's guidance for the rest of this year fell far short of investor expectations. Sales for fiscal Q4 2023 are expected to be only $121 million (about 18% below Wall Street projections). Sales for the full year, accordingly, are now trending toward $530 million -- 5% below Street projections.
I won't say just yet that Bark is heading for the same fate that once befell Pets.com. But judging from the sales trend, it does appear that Bark's growth prospects have been muzzled.
