Petco closes fiscal year with revenue drop

Petco brought in $1.6 billion (€1.5B) in net revenue in the Q4 of its 2024 financial year ending 1 February 2025. During the same period last year, the company hit $1.7 billion.

Comparable sales increased by 0.5% year-on-year (YoY), while gross profit decreased by 2.8% YoY, reaching $589.3 million (€546M). Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) was $96.1 million (€89.0M), down 9% YoY.

Declines were also reported for the full financial year. Net revenue was $6.1 billion (€5.7B), a 2.2% YoY decline. Comparable sales increased 0.3% YoY.

Gross profit dipped by 1.3% YoY to $2.3 billion (€2.1B), and adjusted EBITDA dropped 16% to $336.5 million (€311.8M) from $401.1 million (€371.6M) in 2023.

Negative impact

The company noted that all YoY measures would experience some negative impact due to its 2023 financial year lasting an extra week.

At an earnings call, officials touted their plan to turn Petco around in 2025 and said that long-term trends were still favoring the American company.

“The ongoing humanization of pets continues to be a powerful tailwind, one that we are all well-positioned to benefit from,” says company CEO Joel Anderson.

“Additionally, services is the fastest growing area of the pet category, where we have an established leadership position and a differentiated model of owned grooming and vet locations at scale.”

What’s the plan?

Anderson states that the company is working on a 3-phase strategy and that Petco is currently working on phases 1 and 2.

For phase 1, Anderson says Petco is focused on improving its operating model, restoring retail fundamentals and “giving our stores a voice.” Work on that phase is “well underway,” he notes.

Concurrently, the company is starting phase 2, which aims to strengthen retail fundamentals. Negotiations with vendors and work to improve merchandising were 2 parts of this phase, he says.

Anderson notes that phase 3 should begin in late 2025 when Petco hopes to stimulate more growth.

This includes focusing on omnichannel capabilities and digital experiences for customers and scaling the company’s membership program in 2026. Both Anderson and new CFO Sabrina Simmons say Petco aims to focus on return on invested capital (ROIC) discipline, avoiding any cuts to customer-facing investments.

Outlook

For 2025, Petco expects revenue to decline in the low single digits. Adjusted EBITDA is expected to be between $375 million (€347M) and $390 million (€361M), a projected increase over 2024.

These numbers omit any possible impact from tariffs. In the US, inventory purchases from China, Canada and Mexico for Petco-branded goods represent about 5% of the company’s total merchandise cost, Anderson says. He did not discuss the possibility of other global tariffs or the impacts on its Mexican stores.

The California-based pet retailer says it expects to close between 20 and 30 net locations in 2025 after shutting 25 stores down in 2024.