Petco adjusts full-year forecast as tariffs and store closures weigh on revenue

Petco reported a steeper decline in net sales for the third quarter of 2025, falling 3.1% year-over-year (YoY) to $1.5 billion (€1.37 billion). This compares with a 2.3% drop in the previous quarter.

The products segment accounted for 82.6% of total net sales, generating $1.2 billion (€1.1B), while the service segment contributed $254.8 million (€231M). 

CEO Joel Anderson notes that the Q3 results are in line with the company’s outlook for the period. Comparable sales also decreased by 2.2% YoY. 

“The difference between total sales and comp is driven by the 25 net store closures in 2024 and the additional 9 net store closures year to date,” says Sabrina Simmons, Petco’s Chief Financial Officer (CFO), during the company’s earnings call.  

According to Simmons, the retailer ended Q3 with 1,389 stores in the US.

From loss to profit

Despite the decline in net sales, operating income increased by over $25 million (€23M) YoY, which resulted in an adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $98.6 million (€90M). 

Petco posted net income of $9.3 million (€8.5M), improving from a $16.6 million (€15M) loss last year. 

“We are really pleased that we banked so much profit improvement through Q3. This has afforded us, as I said, the option, and it is only an option, to consider investing in areas that we think can drive improvements, both in Q4 but also for our future,” says the CFO.

For the first 9 months of 2025, Petco posted a 2.5% drop in net sales to $4.4 billion (€4.0B). Net income stood at $11.6 million (€10.6M), compared with a $88 million (€80M) loss during the same period last year.

Outlook and tariffs’ impact

Following the consecutive quarterly declines, the company adjusted its FY2025 net sales forecast to be down 2.5% to 2.8%. Adjusted EBITDA is expected to be at $395 million (€359M) to $397 million (€361M).

“With regard to other guidance items, for the full year, we expect depreciation to be about $200 million (€182M), net interest expense of approximately $125 million (€114M), about 20 net store closures, and $125-$130 million (€114M–€118M) of capital expenditures with a greater focus on ROIC [return on invested capital],” says Simmons.

For the fourth quarter, Petco projects net sales to fall in the low single digits YoY while adjusted EBITDA is forecast to be between $93 million (€85M) and $95 million (€86M). 

Simmons noted that the impact of tariffs will be felt more in Q4, continuing from Q3: “The first time we saw a tariff impact flow through our P&L [profit & loss], through cost of goods sold, in any meaningful way, is the third quarter because the second quarter had, let’s call it, de minimis amounts of that.”