Petco ends FY2025 with sales decline amid strategic pullback

Petco concluded fiscal year (FY) 2025, ending 31 January 2026, with $6 billion (€5.5B) in net sales, reflecting a 2.5% year-over-year (YoY) decline.

Comparable sales also fell 1.6% YoY, while gross profit decreased 0.8% to $2.3 billion (€2.1B). However, gross margin increased by 66 basis points to 38.7%.

CFO Sabrina Simmons told investors during an earnings call that the decline reflects the company’s 2025 strategy to “move away from unprofitable sales.”

“The difference between total and comparable sales is driven by the 25 net store closures in 2024 and the additional 16 net closures in 2025,” she said.

Profitability

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) rose 21.3% to $408.2 million (€374M), exceeding the company’s outlook.

At the bottom line, the company reversed the loss from the prior year: net income reached $9.1 million (€8.3M), up from a net loss of $101.8 million (€93M) in FY2024.

Q4 results

In the fourth quarter of FY2025, the retailer narrowed its net loss to $2.6 million (€2.4M) from $13.8 million (€12.7M) in the previous year.

Net sales decreased 2.4% YoY to $1.5 billion (€1.38B), while comparable sales dropped 1.6% YoY.

Gross profit also fell 1.4% to $580.8 million (€533M), while gross margin increased 37 basis points to 38.3%. On the other hand, adjusted EBITDA increased 10.6% to $106.3 million (€98M), well above the company’s outlook.

Petco closed 7 net stores during the period, ending the fiscal year with 1,382 locations. “The number of 2025 closures came in a bit favorable to our expectations, driven by a combination of improved store performance and favorable rent negotiations that supported improved unit economics for those locations,” Simmons adds.

Fresh food drives consumables

The retailer divides its revenue into 3 categories: consumables, supplies and services. The first accounted for half of Q4 sales and consists of products that pets regularly eat or use. It is also where the company currently sees the biggest opportunities.

“We’ve been a primary destination for fresh food for a long time and are continuing to build on that foundation by expanding the assortment,” CEO Joel Anderson says. “This category at Petco experienced healthy growth in 2025, and we expect the momentum to continue in 2026.”

According to the presentation, one of the goals for 2026 is to increase the company’s product offering by expanding fresh food, launching new national brands, ramping up owned-brands in food and supplies and increasing product frequency.

This will include adding more freezers to its stores, bringing the total to more than 1,000. “Our focus on driving share of wallet is intentional. Of note, those that buy fresh food from us make over 4 more trips per year and spend over 50% more annually than dry food-only dog customers,” the CEO explains.

Advancements in supplies and services

The remainder of the revenue was divided between supplies and companion animals (mainly durables), which accounted for 33% of sales, and services, which represented 17%.

Plans for supplies include expanding the market share of Petco’s own brands across categories such as beds, feeders, collars, leashes and toys.

The CEO highlighted interest in insects such as jumping spiders and tarantulas, which he sees as a newer pet trend in the US.

“Additionally, we launched Gardening with your Pet this month, a new category for us in nearly all of our stores. It includes gardening products and plants that provide customers with pet-friendly options,” Anderson further explains.

On services, the retailer’s goal is to grow its wholly owned services business, including hospitals, vaccination clinics, grooming and dog training centers. “While we took a purposeful pause in constructing new bed hospitals last year, we’ve been focused on improving productivity of our existing locations,” he says.

According to the CEO, Petco optimized “a significant number” of its approximately 300 hospitals but still needs to work on roughly 25 underutilized locations this year.

Outlook

For FY2026, Petco expects net sales growth between flat and 1.5%, with adjusted EBITDA projected between $415 million (€381M) and $430 million (€395M).

Capital expenditures are forecast to reach $140 million (€129M), while net store closures are expected to range between 15 and 20.

For Q1 2026, net sales are expected to fall between a 1% decline to flat, while adjusted EBITDA is projected to range between $92 million (€85M) and $94 million (€86M). CFO Sabrina Simmons notes that this guidance assumes that fuel prices normalize by the end of the quarter.